How much does it cost to construct my space?

There are various factors that come into play when estimating construction costs. The best way to get an idea of construction costs is to bring in a space planner and contractor. Getting an estimate on the predicted costs can prove to be very valuable. A good tenant representative will try to identify spaces that need as little work as possible. By understanding the needs of the client, a tenant rep will go to the market with this information and seek out spaces that would require the least amount of work.

In many instances, the landlord may offer a Tenant Improvement Allowance to assist the build out, or may conduct the work themselves. In either case, the cost of such a build out is amortized over the term of the lease so that the impact on the bottom line is minimal, which allows your business to grow without significant up-front build out costs .

A tenant representative will be knowledgeable about rough costs, will be able to provide some idea of these costs and bring the right people to the table to get a clear estimate

How much do your services cost?

Tenant representation can be compared to a buying agent when buying a residential home. Generally, the landlord or owner will list the space with a listing brokerage. It is at the point that a listing brokerage is mandated that commissions are allocated as part of the sale price. When using a tenant rep in a transaction, the listing agent will split commissions with the tenant rep brokerage as an incentive to bring a tenant to the premises. Commissions are generally standard throughout the industry, and it is rare that the tenant will have to pay any commission. As the commission is already built into the price of the premises using a tenant rep service does not affect the listing price, and is a service that is essentially paid for regardless of whether tenant uses a representative or not

What is the estimated time it takes complete a transaction and move into a new premises?

We generally advise our clients to start about 8 months in advance of an existing lease expiry or target date to open a new location. It is possible to complete a deal in a shorter timeframe, but working with less time can have a significant negative impact a tenant’s ability to get the right space at the right price. One aspect of a transaction that many tenants take for granted is the time it takes for construction or build out of their new premises.

Between the permits and the actual construction work, build out can take as long as 3 months and it some cases longer. Part of Titan York’s process is to work with our clients and develop a timeline that allows for all the right steps to be taken and simultaneously make sure that our clients do not feel overwhelmed or pressured to make decisions.

How much space do I need?

Without an understanding of the amount of space required, it would be very difficult to go to the market and lease space. An understanding of the ins and outs of your business is required as well as an ability to predict customer base and potential growth within the organization. At Titan York, we utilize a system to break down the business in order to develop a spatial analysis and predict the usable square footage required.

Using our experience, combined with your knowledge of your business, we are able to develop a reliable estimate. In addition, this is often the time when we direct our clients to enlist the service of a space planner, who will not only be able to further determine the right size, but also develop drawings which will reflect your future layout.

Now that I’ve found a space, how long of a lease should I sign?

This is sometimes a very difficult question to answer. Generally, it will depend on the nature and stability of your business.

A short-term lease offers flexibility and less risk as at the end of a short-term lease a company can either move or try to renew in the location for their changing business needs. At the same time it does not reflect stability, as the future location and longevity of the company can come into question.

A long-term lease will allow for more stability and generally relates to a predictable growth plan. Additionally, if a space needs construction to be functional, the cost of construction can be amortized over the length of the term. This will soften the impact of the cost of construction. Additionally, on a long-term lease you can take advantage of lower rate and aggressive negotiating and “lock in” lower rates for the longer term. On the downside, if a company is unstable and unsure of what the future will bring, a long term lease can be a liability as opposed to an asset. Although subleasing, assignment of lease, or a termination clause can be exercised to remedy this situation, there is generally a negative financial impact associated.

The best thing you can do when deciding on lease term is to take into consideration the following:

  • Can we predict the growth of our company on 1,3,5, and 10-year terms?
  • Does our product or service provide a stable source of income, or is it possible for the interests of our clients to change?
  • Does the space that I am leasing require a substantial investment in terms of construction?
  • Do I expect rental rates to change significantly in the future?
  • Will the location of my space have a significant impact on the success of my business?
  • Is relocating my business hard to do?
  • Is my rent lower if I sign for a longer term?

What is a representation/mandate letter and should I sign one?

A representation or mandate letter is something a tenant representative may ask you to sign. It will outline the relationship between you and the brokerage and above all demonstrate commitment from both parties. If a tenant representative knows that you are committed to them being your exclusive representative they will work harder for you than if you were to work with various different representatives. Knowing that both sides are committed makes the representative accountable for the deal and they will be comfortable putting in the hours knowing that they will get compensated for their work by a commission at the conclusion of a transaction.

I’m leasing a new space for my business; where do I start?

Before going to look for new space, you must take into consideration several factors;

  • What is the purpose of our business?
  • What is our “go forward” budget for a new location?
  • What is the client base we are looking to obtain? What specific demographics are we catering to?
  • What are the pros and cons of moving (if existing)?
  • Can we afford to relocate or open a new location?
  • Can we afford to stay in the current situation?
  • What are the “spin off” costs of moving?
  • Can we afford to lose some business during the transition?
  • Is now a good time to move?
  • Will a move have an impact on our employees or clients?
  • What is our ideal timeline for this relocation or opening of new location?

There are many things to consider when dealing with either a relocation or opening of a new location. Various factors both related to your business and the local market place must be evaluated. A tenant representative will ask the right questions and help develop a strategy to cope with the requirement in a strategic and efficient matter. It is suggested that you contact a tenant representative for a preliminary discussion, most will be happy to discuss with no commitment needed.

Are all properties listed?

No. It is common for many properties to be “unlisted” or “off-market”. A property being listed generally means that the building or property owner has engaged the services of a real estate company to market the space to the public and other agents. For a property that is “unlisted” or “off market” the owner may be looking to lease or sell without the assistance of a real estate professional, but has not gone as far as to list or advertise the property.

Properties that are not listed can be difficult to find, especially for someone not knowledgeable about the local market. There are many great off market opportunities that not only suit a business, but can often be better deals financially. A tenant representative will be knowledgeable about the local market and can dig up these opportunities. It’s their job to know what’s out there, and do the work to uncover other opportunities.

What’s the difference between a leasing agent and a tenant rep?

The leasing or listing agent represents the interests of the building owner or landlord and only owes fiduciary duties to this person. A tenant representative does not work for landlords, instead the strictly represent the tenants’ interests.

In some instances the same sales representative can represent both sides in a real estate transaction, the buyer and seller or landlord and tenant. This situation is referred to as multiple representation. If possible, it is almost always recommended to avoid these types of situations to ensure that you receive conflict-free advice.

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