A Path for Better Facility Planning

One thing regular visitors to the Tenant's Friendliest Place on the Internet have come to know about us is our constant nudging of our clients to plan, plan, plan. Real estate issues should not evolve around a once every five-year shopping spree "in the market." Rather, you should spend anywhere from 12-18 months minimum to plan how changes in your business over the next 3-5 years may be affected by your real estate and vice versa.

Who Should Plan?

The question that comes up more often than not is how big should a company be before formal planning is necessary? The answer is simple: every firm, no matter how big or small, needs to plan.

Is there a method one should follow? Well, it’s funny you should ask. Over the past several years, IN/House has developed The Facility Planner©. It is a ten-step process we have our clients go through in the planning and implementation of a strategic facility plan. Does that sound like a monster? It shouldn't.

The Facility Planner© does several things for our clients. First, it forces them to think critically about their business. Where are they as a business? Where do they want to go? How are they going to get there? They start to think about personnel issues, marketing plans to increase business, financial plans to be sure the cost of any facility is in line with revenues, and much more.

Second, it serves to record the process. This is particularly important if more than one person is ultimately involved in the decision-making. Clients ask things like, “Exactly how did we come to take an additional 5,000 square feet and spend $30,000 on equipment?" The recording process accounts for these expenses.

Finally, it serves as a simple organizer. Anything having to do with the plan goes in the notebook.

During this and several other chapters of What They Forgot To Teach You At Tenant School, we will present a few of the ten steps we include in the planner and comment about each as we go. If you have any questions, feel free to e-mail us at jerryn@inhousecorp.com.

A Path for Better Facility Planning

Who Should Plan? The question that comes up more often than not is how big should a company be before formal planning is necessary? The answer is simple: every firm, no matter how big or small, needs to plan.

Finally, it serves as a simple organizer. Anything having to do with the plan goes in the notebook.

Section 1

Contracts and Letters

To you newcomers to our site, this may seem an unusual way to start your facility planning. To most, a broker may be just a tour guide to show you the market. However, you won't end up in the right facility unless your broker completely understands exactly what you need. The only way to achieve this goal is to get your broker involved at the start of the process.

Therefore, this should be nothing new to any of our longtime visitors. Make sure you work with one broker and you have a written contract with him. We suggest you work with a broker who does not have an actual (or perceived) conflict of interest with any potential landlords you may be negotiating with. Yes, that does eliminate any broker who works for a brokerage house that takes any direct listings. Of course those listing guys will tell you what a great deal they can get for you because the "know the landlord real well”—if you believe that's to your advantage, then you probably never went shopping for a car. "Let me check with my manager. I think I can get you a great deal.”

Secondly, if you are working with a new broker (not the one who initially put you in the space), be sure to notify your landlord that you have signed a contract with a broker and that all discussions pertaining to your possibly remaining in your present space must be conducted through your agent. Of course either the landlord or his agent will probably try to ignore your letter, or try to intimidate you by saying something like, “we will speak with your broker, but you will have to pay any fees" (search other chapters for more on that). Of course, you lawyers out there may recognize that, by making such a request, the landlord's agent may be interfering with a contractual agreement or establishing an unfair economic advantage. If you’re not a lawyer, ask one for further advice on that matter. We are not lawyers, and do not give legal advice. We have, however, seen some interesting things happen in these situations.

Once you have your real estate team in place, you're ready to move forward.

Section 2

Gathering Data

The first task in any planning process is figuring out what you have. Without establishing a base, it is virtually impossible to figure out where you want to go. It amazes us how often we speak to potential new clients about their business, and all they can focus on is how much space they think they need. We usually turn down those companies as clients.

There are four initial items we recommend our clients research and document. They include the following:

Establishing a project timeline.
Analyzing your present occupancy costs and summarizing your leases.
Making a list of all general personnel in the company and key personnel who would have decision power affecting any facility plan.
Establishing your goals and objectives.

Timelines will cover all major events outlined in our Facility Planner© and will cover the twelve-eighteen month period. It will serve as a guide to make sure of two things: First that you haven't left anything out. Second, that you don't get caught under the pressure of running out of time. Statistically, almost 60% of all companies end up in “holdover" situations. Even the smallest user can benefit from establishing a timeline.

Take a good look at your present obligation. Many decision-makers we work with are initially suffering from what we call “Sometimer's Disease.” They sometimes remember facts about their present lease, and sometimes they forget. Usually they remember the starting base rental rate, but they forget the escalations, additional rent, parking costs, after hour utility costs, and other stuff they need to include in occupancy costs. Maybe there was something in their lease that was important to their company that the broker needed to know would be important in any relocation or renegotiations. Get all the facts out front first.

Get together a list of all company personnel, and designate specific individuals who will handle certain tasks. The mistake too many small firms make is having the principal try to do it all. Trust us, there are too many issues attached to a move. Let someone else take care of all the nuts and bolts work pertaining to his or her area of expertise. As principal, worry solely about the final decisions. Your broker should be available to advise everyone involved. In one recent expansion we handled for a client, the firm president delegated the furniture planning to a capable individual. He did all his planning carefully. Unfortunately, due to his planning, he missed out on one detail that could have cost the firm about $50,000. Believe us when we say your broker has "been there, and done that." Ask for his advice on anything having to do with your facility.

Finally, establish firm goals and objectives. At IN/House we include goals, objectives, givens, assumptions, and priorities in our list of essentials. Have everyone sign off on the final draft of an agreement to be sure you're all on the same page.

Off you go. Once you’ve figured out where you were, where you are, and what you would like to see happen, you're ready to start figuring out how you're going to get there.