The American Youth Policy Forum recently sold the building it owned in Washington, DC for 17 years and moved into leased space around the corner. As Executive Director of the organization, I’ve frequently faced new challenges and been asked to do work I wasn’t always prepared for, but I have to admit that I was flying a little bit blind in selling commercial real estate and leasing office space.
Of course, I’ve rented apartments and bought and sold homes before, but the commercial real estate market is significantly different and more complex than the residential real estate market. While I had a great team of real estate agents, architects, contractors, builders, tech support, and attorneys, there were still many things I didn’t know about the process that I wish I had.
As Executive Director, I set a goal for myself to make sure that the move did not interrupt work and that the staff could continue to do their jobs without having to worry about the move. In some cases, that meant giving them a lot of information about what was happening, and in other cases, it meant keeping information from them when things were in flux.
I decided to only tell them things they needed to know, and keep all the behind-the-scenes negotiations and troubles quiet until they got resolved. Once things were resolved and clear, information would be provided. Staff knew there were some crazy things happening, but they also knew it would be handled and that they would learn about it when it was settled, rather than hearing about every blow-by-blow decision and ongoing drama. I think it worked.
Simply stated, moving is a complicated process, especially in terms of timing and figuring out when the building would actually sell, when the closing would occur, when we would find new space that we liked and could afford, how long the build-out of the new space would take, and when it would be ready to move into it.
It’s like dominoes – you hope everything lines up and falls into place. As it was, we needed to have an extended lease-back period due to delays in the build out of the new office space, which necessitated a detailed legal agreement with the new owners of the building and concessions from the landlord of the new space that we would soon occupy.
Everything took much longer than we thought. Just getting a Letter of Intent to Buy/Sell our building with our prospective buyer took several months of back and forth negotiations between parties and lawyers. Every document, and there were lots of them, went through slow, careful review for weeks.
Quick turnarounds did not exist. I had been expecting the lightning-quick decision-making of residential real estate. I learned the commercial real estate moves more like cold molasses. And for nonprofit organizations, you have to figure in the amount of time it takes to inform your board and get their approval of these complicated and significant financial decisions.
We had a team of several employees working on the move, and most people had balanced responsibilities, except for the staff person in charge of moving the computer equipment and making sure that phones, cabling for internet, and wiring for the internal server were all installed basically in the 24-hour period of our move. This area was especially complicated and time-consuming.
That staff person spent hours and hours talking to and meeting with the tech providers and consultant to ensure that the transition was smooth and that our communications would be up and running within 24 hours. We were lucky to have a dedicated staffer who bird-dogged the phone and internet provider and a great tech consultant who got everything working within a day of our move. It was a massive effort to accomplish, and we only have 15 work stations. I can only imagine how difficult it would be with more staff. This is the one area that will make or break your move, because if you don’t have access to internet and email, well, you know.
While the Tenant Improvement Allowance (TIA), the money the landlord provides for the buildout of the new space, covers a lot, it doesn’t cover everything. At times we were led to believe that the TIA would cover the entire buildout and even the purchase of all our furniture. Unfortunately, that was not the case, as the budget included some unrealistically low prices for furniture.
To stick within the TIA budget, we would have had to select bargain-basement furniture, and we were not willing to do that, as we will be in our space for 10 years. So, we went with a mid-range furniture selection and went over our budget, which came out of our pocket. We also could have spent much, much more on furniture, as the selection is huge. That is one area to really watch and our office furniture consultant really helped us navigate the huge marketplace.
Another surprise expense was the significant costs for cabling our office space for internet, internal server (if you have one), and phones (if you have land lines, which we do). Even if you use VOIP and a cloud-based server, the cost of cabling can be extensive. We never even thought to include that in our budget.
The cost of a junk disposal service was another expense we didn’t anticipate until we were far into the process. Other expenses we didn’t budget for but should have are art work and miscellaneous items like supplies and new items for the kitchen, as well as a flat screen TV for the conference room (not included in the TIA).
Because you can quickly go over your budget, we realized we needed to negotiate with everyone about everything. In some cases, we were able to reduce prices. Even small reductions helped. But, as already said, we went over budget. Fortunately, because we had just sold our old building, we had some “extra” cash to use for all of these expenses. If we didn’t have the proceeds from the building, we probably would have needed a Line of Credit to cover certain expenses. So be prepared.
Here are some other things that we learned:
Use a team. We created the Gold Standard Moving Company, our internal team of staff to work on the move. It turned out that the people who volunteered to help were all naturally super organized, but, regardless, a few things didn’t work exactly as planned. And as mentioned above, the staff person who dealt with technology had the toughest job.
Start early to toss out unneeded items and documents. We tried to do this little by little so we didn’t need a lot of special garbage pick-ups (another extra expense) because there was so much trash. We designated certain days as Clean-Up Days over the six months and made sure there was nothing scheduled so that staff could use that time to toss things out.
Communicate as appropriate. One team member was responsible for sending out a monthly (and more frequent near the end) newsletter to the rest of the staff, letting them know what was happening and when. Having detailed information throughout the process kept staff from getting nervous or upset about the move and smoothed the transition for everyone.
Old furniture is really hard to get rid of. Despite numerous attempts to sell our old cubicles and furniture online or to donate them to charities, it all went into the 1-800-Got-Junk trucks. Plan for that expense, as you probably won’t be able to dell or give much away.
Certificates of Occupancy (CofA) take time and money. We needed to get a new one, and the process took months and wasn’t cheap. We had to hire a third party facilitator to make sure the CofA got handled. Another cost to figure in your budget.
Plan for contingencies. Our space was still under (light) construction when we moved in. Light fixtures were missing along with glass partitions and some kitchen appliances. We gave staff flexibility to work remotely when there was too much construction happening. Having a backup plan for allowing remote work or identifying another temporary work space if the new space isn’t done would be smart.
- Get a good attorney. Because we had the sale of a building and lease negotiations, we needed an experienced attorney. Ours made sure we were protected through some difficult issues. While the cost of the attorney was higher than what we originally budgeted, she saved us money in the long run.
My big takeaway from this move has to deal with budget and cost. I wish someone had told me about all of the extra expenses. Instead, we learned as we went. But there is a happy ending – we all love our new space!
BETSY BRAND has served as the Executive Director of AYPF since 2004, and she served as Co-Director of the organization since 1998. Betsy has spent her career working on education, workforce, and youth policy and specializes in comprehensive approaches to helping young people be prepared for today’s careers, lifelong learning, and civic engagement.