Commercial Space Use: Synergies from Operating Near Customers and Suppliers

Market demand emerging from a recession awaits economic activity to grow and scale each business.  Market demand emerging from a global pandemic requires a healthy society and safety of public spaces to begin growing economics that scale.  With Q22021 upon us, municipal microeconomics await a path to reopen their economy.

Here are key points to assess how your business plans to re-open its work environment:

  • Public health of mass transit or parking services to commute to work;
  • Landlord’s efforts to provide public health and touch-free services to common spaces;
  • Landlord’s efforts to improve and monitor air quality within the building;
  • Leverage cloud services to establish hybrid work environment of on-prem, remote, and flex;
  • Carrying cost of space and flexibility to sublet or divest unused space;
  • Ability to divest space and convert to digital infrastructure to enable productivity remotely temporarily if economic conditions require it.

The goal is maintain business continuity and worker productivity when unexpected external shocks impact business operations.  Securing a lease or buying workspace should not occur in a production vacuum because it often leads to taking the wrong space at terms unfavorable to the business.  Securing the right space at terms right for the business enables it to thrive. 

Broadband and 5G mobile is enabling people to work from anywhere, even workers that reside in remote locations.  That enables business to operate with less commercial space to maintain productivity.  The real estate committee is composed of stakeholders in the space to be secured (e.g. business unit leaders) and a leader to guide activities of the committee (e.g., COO).

The best way to reach that objective is hire a business analyst to evaluate the need and prepare a detailed report that is submitted to a real estate committee that evaluates and oversees the real estate project.  The BA is trained to identify needs, engineer a solution, and present a report how to achieve the objective.  The BA report includes:

  • Location of office with parking or mass transit support;
  • Amount of space needed;
  • when;
  • for how long;
  • estimated monthly carrying cost;
  • how to sublet or divest unneeded space during the holding period;
  • How to divest space if the event of merger or acquisition;
  • Layout and floor stacking;
  • IT needs;
  • Furniture.

The BA report provides support to the committee about how to proceed to locate, negotiate for, secure, divest space, and transfer to remote operations if needed.  The committee uses the BA report to support their decision-making to sharpen company objectives about future space needs.  Space needs typically translate to refresh existing space, renew, re-cast lease to contract or expand, or relocate.  Planning the project in detail facilitates a prepared response (what to look for and how to secure it) vs. an unprepared reaction that disrupts operations (dealing with a series of events).  Before commencing this project, it’s recommended to interview different real estate service providers and landlords to assess how your objectives can be met; a one-page summary appended by a matrix of choices can make talking points efficient.  If the business will lease or sublease, talk the concept out with a commercial real estate attorney; they’re trained to advise you on protections in the lease and important legal clauses.

All the information above becomes decision support to generate a project charter to search for space.  The real estate committee has established the scope of the project and its completion date.  There are co-project managers; one key member of the real estate committee plus the exclusive real estate services provider (a/k/a tenant rep).  Plan for 3-4 weeks of post move-in support to ensure all staff are settled into their space and can work productively.

BREG Team’s web page about Corporate Real Estate Services and [educational] slide file at YouTube discusses our approach; find the link in the web page “About Us”.  I recommend at least 24 months lead time to carry out a space change from 3500sf of office space and 7500sf of industrial space.  A minimum of 12 months to plan and secure the space, 12 months to build it, move-in, and settle in; add time for larger space. If a change of the real estate for your business is on your horizon of projects, I encourage you to contact me to talk it out.  BA reports, test-fits of space and transaction modeling have worked well for BREG Team’s clients since the late 1990’s.  Please click “Request A Consultation” link at the base of the “About Us” web page.  Enter “Synergies” in the subject line; please include your name, email address and telephone number in the message body; I reply within 24 hours.  Thanks for reading and listening.###

About Mayer Segal
Click "About Us" link above.

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