Your post house’s work environment can have a profound impact on employee productivity, client perceptions and overall success. After staffing, real estate is possibly the single biggest factor in fulfilling your short and long-term business plans. To be successful in achieving your real estate goals, however, it is critical that you approach the leasing process strategically.
Real estate decisions are long-term and expensive. At the beginning of any space search, it is important to assess your client’s, marketplace and the impact emerging business practices may have on your business in the future. Taking these factors into account, you can establish a policy on space, which serves as a benchmark.
WHERE TO BEGIN
Your space policy will be drawn from strategic business goals. Do you want to move closer to clients, implement a new corporate identity or integrate new technology?
Operationally, do you wish to accommodate growing staff and improve the working environment for employees or communications between departments?
Your next step is to develop an achievable timescale for the space search and hire a team of professionals to implement it. Your company may need a broker, attorney, space planner, interior designer or architect, engineers, IT experts, contractors or construction manager and project manager. The earlier these professionals are involved in your company’s integrated space planning, the more value they can add. Working with a broker at this early stage can help level the playing field between your business and a prospective landlord in a tight market. A broker can help your company understand the market, how to compete against other tenants for attractive space, and the most effective tactics for negotiating with particular landlords.
A broker can also help your post house define its space requirements beyond the set of objectives set forth earlier. Your post house should consider the size, layout, facilities, location, reception set-up, budget, the image you want your business to project, and other intangible goals for your company.
The biggest mistake most companies make at this stage is mot taking enough space for projected future growth. My client Framestore, NY, avoided this problem by taking twice as much space as its immediate needs required when it leased in New York City in ’04. Projecting a rapid expansion, the company locked in the extra space at current leasing rates, rather than bet against an improving market. Jon Collins, president of Framestore, NY, told me, “We thought we only needed about 5,000 square feet initially. Taking the extra space was like insurance against changes in the market, and we’ve been able to lease it out with no problem.”
Once you have established your space requirements, review and analyze properties on the marketplace. Ideally, you will arrive at a shortlist of four to six properties that meet most of your criteria. Prepare a matrix that list occupancy dates, cost, expansion and lease extension options, location, power supply, floor loads, HVAC control, hours of access, IT requirements, safety and special requirements of each of the selected properties – important issues for post houses. Many buildings do not permit tenant control of HVAC and limit after hours access.
To compare space options on a real basis, it is important to negate the loss factor, so you can evaluate rentable square footage that consisted of common areas (i.e., common corridors, hallways, elevator shafts, bathrooms, etc.) In New York, the market has over time come to abuse the original concept so that today it refers to the amount subjectively determined by the landlord. It is, in effect, a means of boosting actual rental rates without boosting nominal rates. Re-measuring space on your short list will enable you to calculate the actual square footage and the asking price per usable square foot, for more useful comparisons.
After this analysis, arrive at a final shortlist of two or three properties. Then request and analyze prospective leases for each of the properties and conduct a financial analysis on each. You will want to account for and compare every projected occupancy cost, as well as costs associated with leaving your existing location, such as restorations costs, marketing costs for subletting and penalty payments.
Next, prepare and present a counter-offer the prospective lease on your primary candidate property. Your negotiations will encompass lease items such as free rent, possession date and work letter – an addendum to the lease that outlines specifications for improvements that the landlord must make before the tenant will accept the property.
AFTER YOU FIND A SPACE
The design of your space sends an unavoidable message to employees and clients about what the company stands for. Our client The Mill recently won Design Week’s award for “Best Workplace Environment” for its New York City location. Mill chief executive Robin Shenfield told me. “We wanted to create an environment that combined cutting-edge technology with entertainment and leisure areas. To create the best work, clients have to feel invited in to collaborate with work and feel part of the Mill.”
Sinder has helped post houses @radical media, Mad River Post, The Mill, Ohio Edit Homestead, Editorial, Lost Plane Editorial and Bug Editorial lease office space.