Key Elements To Successful Tenant Improvement Projects
September 18, 2014
In my career as a Tenant Representative, I’ve helped hundreds of companies select new locations and negotiate the build-out of new and existing space. Without exception, the key to success has been the critical planning stage.
The earlier in the process a plan is developed, the less business disruption will occur. Developing an understanding of the path of your tenant improvement project’s completion and the milestones along the way allow an accurate prediction of its final completion.
I’ve found three primary elements that must be considered in every situation involving tenant improvements. The first is always the requirements of your business operation. Next in order of importance are issues related to selection of the desired building, and finally, the construction requirements of the necessary tenant improvements. All of these factors, along with other items specific to your situation, should be synthesized into a master project schedule.
Here are some other factors that might affect the execution of your project. The completion of tenant improvements are always affected by the need for specialized improvements or equipment that will require extra lead times. The nature of your business will also impact how long the project will take. Many times, projects are delayed because of the internal approvals that are needed, so be sure to address those early in the process. Finally, consider any seasonal factors that might affect your required improvements.
As you plan for your relocation, it may be tempting to ignore issues that you might consider to be relevant to the landlord. However, everything that is going on with the project can impact your move in date. It’s best to consider and plan for contingencies, even when they are outside your direct control.
For example, there may issues to be negotiated related to the landlord’s financing of the improvements. The landlord may require their own internal approvals, and there may be governmental issues such as permits to secure. Each of these items needs to be incorporated in to the project schedule, because they will affect when your new location is ready for occupancy.
Even the best calculated plan is always a work in progress. In fact, a project plan should be started before the new location is selected. Starting early allows more time to investigate ways to manage the critical requirements and determine if changes need extra time. Imagine that an early draft of the plan reveals that the tenant improvements on your new location might not be completed before your current lease expires. Would it be possible to negotiate a short term extension from your current landlord? If not, what will happen? Can you stay on in the space on a month to month agreement, or will you be forced to vacate? If so, what temporary arrangements can be made? Planning ahead will help reduce unexpected costs and minimize business disruption.
In any commercial real estate transaction, securing the advice of an experienced professional can make the process smoother and less disruptive.
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