Negotiating a lease is like hitting a baseball.  If you swing too early or too late, you wind up in foul territory.  Timing is crucial.  If you start negotiating too early or too late, it can undermine your negotiating leverage.  It you go out in the market too soon, the landlord may not be willing to hold the space you desire off the market until you are ready to occupy it.  This may come as a surprise to some, but landlords are in the rent collection business.  The sooner you occupy the space, the sooner the landlord collects rent.  On the other hand, if you wait too long before starting the project, you may have to make rushed decisions, which can also cost you money.  Vendors like the telephone company have their own schedule, and their schedule may not agree with your schedule.

The timing of negotiations will be predicated on the size and complexity of the space to be constructed.  If an office is just 1,000 or 2,000 square feet, you may not want to begin to look for available space until three or four months before the expiration of your current lease.  For a  medium-sized office of say 3,000 to 10,000 square feet, you might wish to begin looking for space between six and eight months before lease expiration.  Larger projects of more than 10,000 square feet might require a year or more to complete.  A build-to-suit headquarters project of many thousands of square feet may take several years due to the complexities of obtaining municipal approvals and long construction timetables.  The construction timetables presented here will, of course, vary greatly from region to region and project to project.  The above examples are merely a guide.

Let’s look at a time line for a typical 5,000 square foot office lease.

Time to

Lease Expiration                              Activity

 

8 months                                           –  Examine program

–  Look at demographics

–  Determine growth

–  Make preliminary budgets

 

6 months                                           –  Take preliminary survey

 

5 ½ months                                       –  Requests for proposal out to three properties

 

5 months                                           –  Received replies

 

4 ½ months                                       –  Present counter-proposals

 

4 months                                           –  Request lease

–  Complete preliminary floor plans

 

3 ½ months                                       –  Negotiate final lease terms

 

3 months                                           –  Execute lease

–  Commence working drawings

 

2 ½ months                                       –  Order phones and furniture

–  File building permit

 

2 months                                           –  Commence construction

 

1 – 2 weeks                                       –  Install carpet and phones

 

Last week                                          –  Move in

 

 

Eight months may look like a lot of time, but when you examine the time line carefully, there isn’t a lot of room for error.  Remember, you have a business to run while all these things are going on.  Construction timetables in different regions of the country will vary greatly.  Construction timetables can even vary from building to building in the same town.  If you are subleasing space or occupying space that requires only minor construction, the timetable will accelerate.  In some municipalities just obtaining a building permit can take more than 30 days.  Find out what is typical in your area.  The key is to plan ahead using local expertise.  Get a detailed construction timetable from the contractor.