by: Chris R. Prins, NAI Wisinski of West Michigan
As commercial real estate professionals, it is imperative that we properly set our clients’ expectations. With the current market being so restricted in terms of vacant space and available buildings, it is even more important that our clients have realistic expectations. A client who is willing and able to wait for the perfect space would be given much different advice than one who needs the space yesterday. For the sake of this article, I am assuming the client needs to occupy new space soon. I am also speaking specifically with the industrial market in mind, but the concepts should also fit for other product types as well.
Since the amount of available vacant space is so limited, the two primary objectives a prospective tenant or owner-occupant need to keep in mind are compromise and creativity.
Compromise- If a company needs to change or add locations soon, it is highly likely that the perfect space in the perfect location at the perfect price simply doesn’t exist. For example, a company looking to locate within a mile of US 131 might need to expand that radius to within three or even five miles of US 131. Much of the vacant space in our market is new construction. Typically, the price to lease a new building is higher than an existing building, so the client may need to be willing to compromise on the price. Some of this increased cost can by offset by lower utility costs due to better insulation and more efficient mechanical systems, both of which you would likely find in a new building.
Creativity- Location and price aren’t the only areas where the client may have to compromise. The other could be with the physical attributes of the space or property. This is where the creative minds of a broker, architect, or engineer could be the key component to getting a deal done. Maybe the ceiling heights are a little lower than desired, or the office layout isn’t exactly what the client had in mind. Maybe the manufacturing area is cut up into a few sections rather than being a wide-open space. Or, maybe there isn’t enough parking onsite. Rather than walking through a building and immediately saying, “this won’t work”, it is better to ask, “is there a way to make this work?” Or better yet, “how can we make this work?” Look into the possibility of moving or removing interior walls. Is there additional parking that can be leased at an adjacent property. Maybe a loading dock or drive-in door can be added.
Location, price and space won’t always align with our client’s needs. Setting realistic expectations upfront in the process is vital. Thinking creatively and researching options for our clients will create more work and require consistent communication. However, these are critical components to serving our clients and are some of the most important ways that brokers can add value, especially in our current market.