When companies look for offices, they are often impressed by appearances of buildings, their location and rent.
They are generally not aware of issues such as the financial situation of the owner, facility and common areas management, the tendency of the community expenses for the next 10 years, neighbouring companies in the building, the surroundings and services, and other factors that can transform an apparent good lease deal into a bad lease transaction.
To protect your business, you need to pay attention to the following issues:
1. Is the building management good?
It must go beyond the appearance of the building to determine if a owner will be a good partner for the duration of the lease. Normally, the appearance of a building is good, more so in the days prior to a visit leading to negotiation. It is usually satisfactory at first, but remember that the contractual relationship can last many years.
FSC takes the satisfaction index of the current tenants of the property into account to determine how the owner responds to incidents or maintenance in the building, it is important to answer questions such as: Does the owner diligently respond to an incident? Does the owner perform preventive maintenance? Does the owner have a team of people that know the building and resolve incidents?
2. From a financial point of view, how does the property stand compared to others?
This requires preliminary assessment work. It is essential to understand if the building, or the owner, has financial problems and if any of these problems can affect building maintenance impacting working conditions because of security, cleaning, air conditioning, etc.
FSC will report how much debt the building has, make a financial analysis of the owner, perform a comparison of the costs of community with other similar buildings, and determine whether maintenance critical to the building has been carried out or postponed, concluding whether higher community costs can be expected in coming years.
3. What are the physical conditions of the property?
There are many factors that hinder a potential tenant understanding the capabilities of a building without an in depth technical analysis of the facilities. For example, maybe air conditioning and ventilation are designed for open space and the company requires a panelled space, and it’s natural that the owner tells you it’s just a matter of dividing. However, usually, it is not. Divisions affect air conditioning installations, emergency exits, evacuation plans and even operating licenses. Adapting the facilities to the needs of the tenant may involve a significant cost. Buildings that look modern and flexible, may have improper maintenance or technical characteristics that make it inflexible and the cost of implementation too high.
4. Should we compare the community costs of the building we are interested in with others?
Many leases may look similar, but if you compare the community expenses during the lease time there may be an important extra cost. It is therefore advisable to analyse the facilities and concierge expenses, management fees, taxes, air conditioning, electricity, water, maintenance, cleaning, etc. This analysis will allow you to understand current and future costs, and allow you to determine which option is actually cheaper even considering the impact of community fees.
5. May there be hidden drawbacks related to the location of the building?
Prospective tenants may positively value the location because it is near a main central transport station, the financial district or an area well communicated by motorways, and may be amazed at the condition of the building when visiting the premises during normal working hours. However, there are companies that have staff schedules broader or different from regular working hours and it is important to know what the conditions of the neighbourhood are at those times. You may need to reinforce transport, safety or offer a company canteen.
6. Could other tenants in the building be inconvenient?
It is important to understand what current occupants a property has, as there could be a call centre or a public administration office involving high traffic and high use of elevators, parking and building services or security risks. On the other hand, one must understand the areas that current tenants occupy and their expansion needs.