The space acquisition process is affected by numerous factors, particularly the property type and parties involved; making every deal unique. The process to purchase commercial space begins in the same way as the leasing process but diverges after the user needs analysis.
Perhaps the greatest differentiating factor governing the process is the relationship between the two parties. In the leasing process the tenant and landlord enter into a relationship for the duration of the lease term. As a result, landlords incur a certain level of risk and must evaluate which individuals or companies they are willing to accept as tenants. In a sale, the owner is primarily concerned with the buyer’s ability to perform.
Despite the transactional nature of the relationship between the two parties, buyers and sellers do not always behave rationally (from an objective standpoint) and can have markedly different opinions of value. Also because of the permanence of the transaction there are a number of issues that can arise during the due diligence process that can jeopardize a deal. Discoveries of needed repairs, environmental issues, etc. can drastically affect the economic terms or kill the deal entirely.
Still there is a general process that can be compartmentalized into phases. The steps of the space acquisition process for purchasing commercial space are:
- Research the buyer
- User needs analysis
- Market research, including physical tours of buildings.
- Letters of intent/Offer letters
- Contingent Purchase Agreement
- Analyze Proposals
- Due Diligence
- Closing and Transfer of Title