Crunch Time: Space Plan, Renovate to Reduce Square Footage
Dan Mihalovich
It’s no surprise that brokers earn larger fees when clients lease more square footage. Or, better yet for brokers, when their clients commit to “must-take” expansion space rather than securing “options to expand”. However, it's been our experience that what our clients most need is LESS initial space, coupled with the ability to exercise expansion options at future dates of convenience. We work to negotiate such options—to take, or not, space in the future—which will be carried at the landlord’s risk and expense until then.
Most often our new tenant clients have in mind a square footage requirement when we first meet. Our goal, remember, is to establish
usable square footage for initial occupancy;
best guestimates for square footage after Year 3 of the lease; and
potentially more option space at Years 6 and 8 for longer term leases.
Tenants are best served by identifying these requirements at the outset of the process—an exercise choreographed by the tenant-team space planner. Speaking of which, our Guest Articles section contains many articles by space planning firms. One article on topic—“Office Planning Guidelines: How Much Space Should We Really Be Looking For?”—does a fine job illuminating the factors to consider.
Lease what you need, nothing more. If the prospective new landlord is uncooperative when it comes to options for you to expand, consider this to be an omen for concessions—or lack thereof—in the future.
How much office space do you really need? Use this FREE Calculate tool to get a real-world view of your total space requirement before you search for space. And let us know how we can help you.
Cheers,
MIHALOVICH PARTNERS
655 Montgomery Street, Suite 1490
San Francisco, CA 94111
T: 415-434-2820
C: 415-999-9244
T: @MihalovichCRE
E: [email protected]
W: www.TheSpacePlace.net
License # 01376000
About the Author
Mihalovich Partners, a San Francisco based commercial tenant-representation firm, was formed in 1998 by Dan Mihalovich, then a 16-year Industry veteran and Director of Office Leasing at Cushman & Wakefield. Mihalovich brings to the firm 35 years of business experience, focusing on Market Analysis, Negotiation Skills and Project Management expertise. He has managed over 200 office-leasing and project management assignments for many of San Francisco's most prestigious tenants. His career, and the focus of Mihalovich Partners, is solely driven to advocate the interests of San Francisco tenants in leasing negotiations of all types—renewals, relocations, renegotiations, and terminations. Mihalovich Partners never represents landlords, avoiding conflicts of interest, unlike most firms in the leasing brokerage business.
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Learn more about Mihalovich Partners at www.TheSpacePlace.net.