Part Two

Last month, in Part One of this report, we discussed why more companies are turning to Project Managers to help realize upfront savings.  Now, in Part Two, we continue our discussion, starting with a review of factors that are key to this process: space needs assessment, virtual office considerations, base building conditions, tenant improvements, and realistic occupancy date.

Space Needs Assessment

Is the assessment of your space needs accurate?  For instance, are you sure you need 30,000 SF, or could you reconfigure your space more efficiently to utilize only 28,000 SF or 25,000 SF?  What about the potential for expansion or contraction over the course of your lease?

Virtual Office Considerations

Tied to the above, advanced technology and a new generation of workers are enabling companies to do more with less space.  With employees wired from their home offices, hotels, or virtually anywhere, they can be connected while not requiring permanent seats at work.  Rather, shared seating at the workplace (combined with smaller yet more efficient workstations) can significantly reduce the office footprint.

Base Building Conditions

Have you identified the deficiencies of existing base building conditions when comparing alternatives?  If the landlord isn't held responsible, what is the tenant's cost to upgrade mechanical, electrical, and fire/life safety systems?  Have code issues that affect occupancy been analyzed?  (A seemingly even comparison of two buildings with the same quoted rent is not truly comparable if one requires additional expenses to improve base building condition.)

Tenant Improvements

How much of a tenant improvement allowance will you need to build out the space to meet your requirements, accounting for all non-construction-related costs?  This is essential to negotiating accurate tenant improvement dollars.  If you're using seasoned project management consultants, they will help you accurately identify fit-up costs so your team can more effectively negotiate landlord contributions.

Realistic Occupancy Date

When can you realistically take occupancy?  This estimate must account for all factors, including scheduling of design, permitting, construction, furniture delivery, technology installation, and all other relevant vendors' work.  Older buildings may require additional work to correct building envelope deficiencies.

In addressing these considerations, the best strategy is to enlist a team that includes a real estate advisor and an experienced project manager.  They can facilitate aggressive negotiations and help avoid costly mistakes by identifying both short and long-term space needs.  Their value is realized in avoiding costs, which will result in significant savings.

In the final analysis, the addition of project management in no way negates the importance of a corporate real estate advisor to represent the tenant.  Rather, the early integration of project management and brokerage services adds value, ensuring greater efficiency, continuity, and accountability.  From strategic planning and transaction support through project preparation and execution, an integrated service approach can increase upfront transaction savings, decrease client time, mitigate risk, reduce overall occupancy costs, and deliver successful projects on schedule and on budget.

No matter what the economic climate, you should negotiate the best transaction terms possible.  At the same time, by looking beyond traditional lease terms and building conditions, you will squeeze less obvious, but potentially greater savings out of your lease.

For more information on this topic, you may contact Barry Dubé,

a principal in our Project Management Group.  We also encourage you to visit

our website to review blog posts on Project Management topics:

http:www.cresa.com/blog/category/project-management/