Time can be either your best or worst friend during the leasing process. Beginning the leasing process early can gain you much-needed leverage and can minimize stress for your team. Meanwhile, starting the leasing process toward the very end of your current lease can cost you heavily.
Why is it Important to Start Early?
You should begin the process early enough that you have enough time to:
If you don’t allow enough time for each of these steps, you could lose leverage and be forced to make decisions without fully vetting each option, ultimately resulting in financial loss or business interruption.
The Timeframe to Begin the Process
Whether you are looking for new office space or planning to renew at your current space, you should follow the same process on the front end.
In order to achieve the best results on a renewal, it is important to create a sense of uncertainty with your current landlord. If your landlord believes there is a chance the that you may relocate, they are typically more likely to offer more attractive deal terms.
Typical renewal/search timelines based on tenant square footage are:
|Company Size||Timeframe to Begin Process|
|> 25,000 sf||18 – 24 months prior to lease expiration|
|10,000 – 25,000 sf||12 months prior to expiration|
|< 10,000 sf||6 – 12 months prior to expiration|
While these are the typical timelines, there are a number of factors which could impact this schedule, such as:
How These Factors Impact When You Should Begin Looking for New Space
Changing market conditions can have a significant effect on when you should start searching for new office space.
For example, tenants in Northern VA have the benefit of a multitude of new construction being delivered which gives a wide range of options when evaluating potential spaces. Smaller tenants can typically begin the process later into their current lease given the availability of smaller office suites. Larger tenants are forced to start the process much earlier, given that the lack of available contingent spaces. These tenants may need to look at new construction or a move to a nearby submarket.
New developments in the market can have a significant impact on the timeline to start searching for new office space.
For example, if there is a large amount of office space under construction in the market, it is important to act quickly before other tenants sign leases on the new space as the first tenants into a development typically achieve the most favorable economics. By hiring a tenant rep and visiting the site in the early stages of its development, you can usually gain leverage over those who come later in the process.
The condition of the space you eventually lease will significantly impact the time needed for construction planning and build-out.
Since you will not know the condition of the space you will ultimately end up leasing before beginning the process, it is important to allow enough time for a potentially long construction timeline.
If there was already a tenant in the space and much of the infrastructure needed is already in place, the construction timeline will be shorter. This type of space is called a second-generation space. Shell space, space that is either new construction with very little infrastructure in place or a space in which the landlord has removed the majority of the necessary infrastructure after the previous tenant vacated the space, requires significant architectural and engineering work as well as permitting adding months to the construction timeline.