When you, as a business owner or manager, hire a commercial real estate broker to represent your business in its search and negotiation for office or warehouse space, the above question: “What do you need” is often the first question you’re asked by the commercial broker.  Needless to say, the question is often received with surprise and perplex.  More often then not, the commercial tenant doesn’t know their needs as it pertains to office space.  Further, the business may have naively hired the broker to help them identify space needs.

During my 23 years of leasing all types of commercial real estate, but specifically Indianapolis office space and Indianapolis warehouse space, as well as representing tenants throughout the US, it is not uncommon that business owners and managers are not aware of their specific needs for commercial space. Additionally, many businesses have hired a broker to help them uncover some important questions about their future office space.  Ironically, commercial real estate brokers, including me, are not equipped to uncover these needs, unless of course, the broker was trained in space planning and design.

When my clients lease Indianapolis office space or warehouse space, unless they have a very clear understanding of their needs, I will recommend their hiring a commercial space planner and / or designer to help with a needs assessment.  In fact, this step has become so important, my firm, CARMEN Commercial Real Estate Services, as a service to its clients, has a project manager and designer on staff to guide clients through a programming process and needs assessment.  Until the business’ needs are identified and clearly defined, I cannot effectively perform my work.

As a further note on this subject, you should beware of the commercial real estate broker that feels compelled to first ask its client:  “What do you need?”  You have to ask yourself if this is a professional that is willing to do all of the ground work that is necessary to understanding your business and its needs.  Or worse, is this broker more focused on getting your business to a closing, as opposed to providing your business with a valuable service.

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While recently reviewing a client's lease, it occurred to me that office and distribution center expansion are probably the leading reason commercial leases are renegotiated prior to the planned expiration date.

How often have we, as consumers, felt like the Seller has us "over a barrel" as a result of an extenuating circumstance that places us in a less than desirable negotiating position?  In my case, it was turning in a leased auto early.  Somehow I convinced myself that I would only drive ½ the number of miles than I had historically driven my car year after year. Let’s put it this way.  The salesperson could have told me that my new Chevy was a bargain, in spite of the monthly payment that would have allowed me to comfortably drive a new Bentley, and I could only smile.

Too often, business owners and managers seem to concede that they’re over the proverbial "barrel" when their business requires an expansion of its office or warehouse well in advance of their firm’s scheduled lease expiration date.  This can lead to unnecessarily paying more rent under highly rigid lease terms. 

Leased facility expansion is an opportunity to renegotiate an existing lease and improve upon terms originally negotiated.  It’s also an opportunity for a business to reconsider how it uses its space; possibly remodeling its existing offices to better suit any changes that have occurred in the business since the office was new.

Keep in mind your landlord wants and needs to lease more space.  Your business is the key to making that happen.  The business owner and manager should capitalize on the landlord's needs by improving the office or distribution center lease terms.   When negotiating facility expansions on behalf of clients, I never fail to make it clear to the building landlords that only through its being creative and aggressive, will it realize benefits of increased occupancy and greater building operating income.

Think of it as a partnership between landlord and tenant.  The landlord creates expansion opportunity; the tenant uses this opportunity to expand its business.  The landlord's increased building occupancy and rental income increases the value of its real estate.