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When Should You Start The Real Estate Process? « CGC Commercial
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When Should You Start The Real Estate Process?

by samEicher, 3:16 PM on May 31st, 2011, No Comments

Whether you are looking to purchase a building, renew your lease, or relocate your business, it is important to have enough time to understand all your options.  In order to understand all of your options, it is ideal to begin the process at least twelve (12) months prior to the lease expiring.  During this time it is helpful to compare your lease rate to the market, analyze if purchasing a property is a viable option, and formulate a strategy for whichever path is best.  

Purchase

It takes time to find the right building for the right price, so having enough time to review all the available options is critical.  The first steps are to figure out a budget for the size and type of space needed, then get a thorough understanding of what the initial down stroke and the monthly payments work for your business.  Meeting with your Banker and Real Estate Agent will be beneficial.  From that point, a good 3-6 months is an appropriate amount of time to tour properties.  Once a building is found, there is much more work to be done:

  • Review any possible construction costs associated with the purchase
  • Do preliminary inspections of the property
  • Negotiate price
  • Perform due diligence items such as title, survey, environmental, structural, etc
  • Close on the property
  • Get city permitting, construction, and move in

The above bullet points can be as short as two months and as long as six.   From start to finish, many of our clients take 12-18 months to complete a transaction.

Relocate Leased Premises

If you decide to lease and relocate, it is important to strategize 12 months prior to lease expiration.  Analyze how your lease rate compares to the market.  Formulate a team to help with the relocation, from an Architect to Construction Manager, it is important to have a solid team around to help make the transition smooth.  Many companies hire a project manager to oversee everything from the business cards to phones/cabling to construction.

Once your team is set up, the tour process begins.  3-9 months of touring property is an adequate amount.  Of course it can be done quicker however having enough time to review all availabilities and narrow the list down to three is the ideal situation.  Once the top three are found the following items need to be completed:

  • Have Architectural drawings completed
  • Construction estimates
  • Negotiate proposals
  • Negotiate lease
  • Perform construction
  • Move in

The above will take a minimum of three months and as long as six.  The more time that is available, the easier the process will be.  Completing these steps will result in finding the best location for your business and ultimately help you find the ideal location.

Lease Renewal

Companies that are negotiating with their landlord 6-12 months in advance of the lease expiring see greater savings.  The reason is that the threat of moving is far greater to the Landlord when the lease is 6-12 months out.  Most Landlords know if you are in the market looking at all your alternatives and if you have the appropriate amount of time to facilitate a move.  That alone will motivate them and put you in a better position to negotiate.  All situations are different, and a strategy tailored to your needs is highly recommended.  Start this strategy 12 months prior to lease expiation to have the best results.

Hopefully this gives you a clearer understanding of the commercial real-estate process.  It is always a good idea to begin the process sooner than later and one year in advance is a great starting point.

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