We work with a lot of businesses looking for Commercial Real Estate and we get asked all of the time, “How long before we need to move should we start looking at properties?” Many owners are surprised to learn that finding the right space is NOT always a fast process. If you are not from the South, you may even say it is agonizingly slow.
After compiling multiple client project timelines, we have answers for you. We also outline the cost benefits of taking your time in the process. Check out our Case Study documenting Float Alchemy‘s experience finding their perfect location with Liz Gatlin for all of the fascinating details and learn how we saved them hundreds of thousands of dollars in the process by taking our time to do it right.
People Involved in a Commercial Real Estate Deal
Searching for Commercial Real Estate is a different process than searching for a Home or a Car. This is because of the complexity and scale of a Commercial Property.
First, consider the shear amount of people involved in a commercial real estate transaction:
- Primary decision makers on both sides (2+)
- Cooperating Brokers (1-4)
- Lenders (1)
- Attorneys on both sides (2)
- Architects & Engineers (1-6)
- Inspectors & Surveyors (1+)
- Planning & Codes Departments (1-5)
- General Contractors & Foreman (1-2)
- Business Constituents and Staff (1-100’s)
- Board of Directors or Investors (1-50)
- Council & Community (1-100’s) – Involved in Rezoning & Development
That doesn’t even include all of the people then impacted by the property and business once the deal is done. You can see that all adds up to a lot of coordination and proactive communication. And everyone’s schedule has to line up.
We typically need one week advance notice to schedule property tours as each space will be opened by the listing agent. If you want to see multiple spaces at once, you have to give everyone time to line up schedules, tours, drive time, and access for your properties of interest.
At the end of the day, you likely have upwards of 10 people involved in making a deal come together. We are responsible for leading everyone through the process diligently to ensure all parties are making highly educated and informed decisions that positively impact our clients. This not only takes TIME, but a ton of communication, and great relationship skills to ensure everyone in the process gets from the start to the finish line.
The Typical Timeline of Searching for Commercial Real Estate:
When we started working with Float Alchemy, I had represented them prior as their Broker & Architect for Float Nashville, and knew we could get through any project together. There were 2 partners in the business, Mark & Amy, and I knew we had significant buildout to accomplish after finding the right space.
The year prior, we had gone under contract on a property to purchase in Murfreesboro, only to have the Engineers on the project kill the deal with concerns dealing with expensive exhaust fan systems needed for the property. So we began searching again in June of 2016 with a new plan of attack and new and improved business systems in place.
From June until December 2016 we looked and toured the market. If you are reading this from Nashville, then you understand that in a highly competitive real estate cycle with limited inventory, there are not a lot of options to consider, and sometimes the waiting game is the only one to play while you look for a DEAL (not to be confused with the majority of properties available).
We submitted our 1st LOI “Letter of Intent” in December after touring multiple properties. That one didn’t work. We continued searching and touring, submitting our 2nd & 3rd LOI in February of 2017.
I always encourage clients to consider multiple opportunities and properties before final commitments. This encourages competition and leverage, allows you to get a realistic view of the market, and helps to compare apples to apples so you can get the best terms and deal for your needs. Check out our Southern Athena Property Decision Matrix in our shop for more considerations on how to determine the right property to align with your goals.
We submitted our 4th LOI in March and continued looking.
Leveraging Time to Negotiate Better Terms
In the background, one of the LOIs was being negotiated more than the others, and we began working towards a formal lease. The space and general terms worked for their business model, the cooperating agents were people I had worked with prior so we had good rapport and were able to communicate effectively and professionally.
The landlord was more willing to work a deal as the primary tenant in the space was moving out by a specific deadline, unlike one pocket listing were we had to go incognito and sneak around to view the space so as not to spook the existing tenant.
I did get to pose as a potential bride and try on wedding dresses (again) in the process. I said “Yes to the 2nd Dress” with my new maid of honor, Amy, by my side. –> Really going for the gold for this client! No stone or opportunity was left unturned.
By taking our time on the front end to get familiar with the market and because we prepared multiple LOI’s for a Comparative Lease Analysis, we were better prepared to negotiate the best possible terms for my client.
In June of 2017, after 5 months of negotiations and due diligence, they signed a Lease.
And ended up saving Float Alchemy over $300,000 in the process!
The Commercial Real Estate Exclusive Representation project from start to finish took Exactly 1 year to the month.
This has been pretty normal for the clients I have worked with over the last 5 years in our rising market. It’s an economics equation: The hotter the market, the longer you should plan to take in your search to give yourself the highest ability to get the best price.
If it is a Seller’s market, then you are stuck having to choose PRICE & TIME as your top 2 priorities if you want high quality space for your needs. If it is a Buyer’s market in a down economy and there is a ton of inventory, then yes, you will likely be able to move much faster as you have the pick of the litter and are not competing against others looking for great properties.