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About the Author
Scott Nelson is President, Occupier Services and Corporate Solutions | Americas at Colliers International. For much of his 25-year career in commercial real estate, Scott has held key leadership roles within the corporate occupier segment of the industry. Scott continues to build and lead a large organization across all occupier client service offerings. He has direct client service experience resulting in value creation in the area of real estate portfolio strategy, occupancy cost reduction, business intelligence technology deployments, process improvements, organizational design, capital and expense optimization, transaction management, project management, and lease administration.

Do’s and Don’ts of Choosing Office Space

ScottNelson
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It’s been a year since your company began operating in an entirely new city, and during that time you’ve managed by using coworking space. You’re not alone – this type of flexible workspace accounts for approximately one-third of office leasing for fast-growth firms looking to expand.


Now that you’ve grown, it’s time to start seriously thinking about all alternatives for your workplace moving forward – but questions about recruiting and retention, location, technology, space planning and the like can leave you feeling overwhelmed.


In the beginning of my commercial real estate career, I worked closely with clients to deeply understand their business plan and how a real estate strategy could support that plan – essentially becoming an extension of their business. I’ve been in the industry 25 years, and for many years now have had the privilege to lead our organization that delivers this expertise for hundreds of our clients every day, across the globe.


Among the biggest struggles that companies face include competition for sales, managing costs, and attracting and retaining employees with the right skills. And now more than ever, commercial real estate is about more than just spaces for your operations. It’s become an essential part of business and people strategies.

 

Regardless of your company’s stage of growth, watch for the following pitfalls when looking for a new office:

  1. Don’t cut yourself short on time. Planning, finding, selecting, and settling a contract is time consuming. Without enough time, you could end up signing an unfavorable contract or settling for a space unsuitable to your needs.
    Do: Allow 12 months for the entire process.
  2. Don’t neglect stakeholder buy-in. The latest findings from Gallup show that a little more than half of employees are disengaged from their work. This means they’re generally not putting in full effort and could be actively looking for a new job. Neglecting employee opinions will only increase the chances of them going elsewhere.
    Do: Engage your people in the process and understand how your real estate strategy can impact engagement.
  3. Don’t concentrate your search on only one solution. Too often, companies identify their ideal solution without pursuing other options in case the deal falls through or needs change. Landlords and other space providers will always be talking with multiple parties.
    Do: Negotiate terms on at least 2-3 alternatives to avoid any last-minute scrambles.
  4. Don’t focus solely on financials. Although occupancy costs only account for a fraction of total revenue, CFO’s cannot calculate the value of their real estate by the price per square foot alone. Aside from the bottom line, your space impacts employee productivity, engagement, recruitment and retention, as well as client and brand interaction.
    Do: Consider the cost, location, amenities, space design, and how the overall look and feel of the space will impact your brand and whether it will attract potential applicants.
  5. Don’t lease a space that only meets your current needs. Considering the typical length of a lease is 3-10 years, it can be shortsighted to contract for space you need today.
    Do: Plan for changes to your business, from amount of space to location to cost. Have a well-thought-out exit strategy as well.
  6. Don’t assume contract terms are non-negotiable – and don’t negotiate contracts on your own. Everything is negotiable in commercial real estate. You can be sure that in its original form, a lease is written to favor the landlord. If the contract terms for the property you choose are inadequate, it could severely hamper your ability to grow.
    Do: Read through the contract carefully with a real estate attorney and commercial real estate consultant by your side.

There are a multitude of important factors to consider when it comes to choosing the right commercial real estate space for your company. On top of that, the typical office environment has rapidly evolved over the past few years as cubicle walls have given way to open office layouts, which have morphed further into flexible workspaces that accommodate a variety of styles.


Meanwhile, the explosion of remote work and collaboration technologies has revolutionized how and where people work. These changes have tremendous potential to increase employee productivity while enabling you to create an environment that truly caters to their needs. But it also introduces countless other decisions, which brings us full-circle to the feeling of panic that sets in whenever you consider leasing office space.


Rather than doing it all yourself, consider hiring a commercial real estate professional – but don’t sign on with the first person that comes along. Interview several and hold out for someone with the following qualities:

  • Asks astute questions
  • Understands your business and the challenges you’re facing
  • Provides objective recommendations customized for you

With the help of a qualified commercial real estate professional, you’ll get much more than a space to call your own. You’ll have a workspace that’s designed to fit your needs while driving your business plan into the future.