The process of selecting the right
building in which to run a business
consists of many steps, not the least of which involves identifying whether or
not a site is suitable for a company’s specific needs within its industry. The best
place to start may be with a landlord that
specializes in the product type that your
company requires.
“There is specialization in the industry,” says John Behm, managing principal with CresaPartners in Philadelphia.
“And that could be a good thing for tenants if it’s properly identified and properly used.”
Smart Business learned from Behm
about how landlords factor into site
selection.
Should tenants seek out particular landlords?
This should never be the start of the
process. Rather, the tenant should be
inwardly focused at the outset. Once the
basics are understood and the general
location established then it is wise to
examine landlords that may have an
expertise with your particular need.
Typically, you will find clusters of property that suit your needs in the area chosen. If this is not the case, we suggest
examining your criteria again to see if
the fundamental assumptions are valid.
This is not to suggest that one should
always follow the herd, but if you would
be the only retail business in the midst of
an industrial complex, you may have
gone off track somewhere.
How can tenants identify the appropriate
landlord for their business?
There are certain owners, or landlords,
that have a self-defined niche. So if a particular company is in the initial stages of
looking for space, there are resources,
particularly through the real estate community, that will be able to guide them to
those landlords that have an expertise in
the product type they need. There are
owners that have developed and manage
product across many sectors, but it is difficult to be the best in all categories.
There are certain owners who clearly
have an expertise in specific building
types, such as suburban office, office
towers, retail, industrial, warehouse, lab
etc. The best in those categories very
rarely try to compete in all categories.
They tend to stick within their own
niche. This discipline should also be
applied to all members of your project
team, as well, such as your architects,
contractors, movers etc.
What criteria should tenants look at within
their own business?
For somebody that’s not fundamentally
versed in commercial real estate, you
want to develop a project charter, which
is meant to clearly define the business
needs in as much detail as possible. This
would include the fundamentals of location, budget and type of facility, but it
should also address access, image, culture, etc. Once this is completed and the
business has affirmed those project
parameters, a real estate adviser should
be able to recommend the buildings that
meet the business’s criteria and, specifically, those owners that should be considered who have a demonstrated history and experience in your industry.
Is the process any different for small businesses?
For small and medium-sized business
owners where their facility is their only
presence, it is critical that this be executed properly. This type of owner does
not have the luxury of moving operations to another better-suited facility if a
mistake is made. A lease is often a long-term relationship between companies.
As with any business decision, you want
to make sure that your partner is an
expert in providing the services you are
contracting for — in this case, your real
estate. It’s not a one-way street.
What should tenants expect as far as accessibility to the landlord in the negotiating
process?
It all depends on the people that are
working for that particular owner on
that particular project. It’s not unreasonable to expect the favorable experience
found during the courtship with your
landlord to continue throughout the
course of the lease. Good negotiations
are not confrontational. In helping to
manage this process, a good real estate
adviser will help with setting and implementing your expectations. We have
found through our experience that the
most well informed business is able to
then make educated decisions. The
results can be demonstratively different
from a business that forfeited representation that could have provided specialization on its behalf.
JOHN BEHM is a managing principal with CresaPartners in Philadelphia. Reach him at (610) 825-3939 or [email protected].