Even if you've never worked with a tenant rep before, you've likely heard from one. Tenant representatives and their firms frequently make business calls and send emails to companies to offer their services, so when you're looking to hire one, you'll find no shortage of options. As a result, the search process can be overwhelming – and many companies find it challenging to narrow down their options and choose the right rep.
A quality tenant representative, or tenant rep, will walk the user through the process and lend his or her expertise in each stage of the transaction – from planning to unpacking. To help you make the best decision, here are a few things to be aware of when choosing a real estate broker who will represent your needs as a tenant:
Reps Vs Brokers – They Are NOT the Same
The very first thing to keep in mind is that tenant representatives and commercial brokers are not the same thing. While some may not mention the fact, many brokers represent both landlords and tenants. The conflict here is clear and should always be avoided. What is not always so obvious are brokers who only represent tenants, but work in firms that also represent landlords.
True tenant reps are paid by landlord fees, but they only represent the tenant. One of the first questions you should ask any prospective rep is if they will be representing you alone, or if they also represent the landlord.
References
Experienced tenant reps should have a list of references when you first meet with them. You should begin your due diligence by contacting the listed individuals. Put together a list of questions to assess their satisfaction and find out exactly what services the tenant rep provided.
Although some tenant reps must sign non-disclosure agreements for some of their clients, often the more recognizable ones, a good and experienced tenant representative will have at least a couple of happy clients to offer praise.
In this digital age a LinkedIn account is a great place to get a glance at the social proof surrounding (or not surrounding) a candidate for your representation.
Online Research is a Part of Due Diligence when Hiring a Tenant Rep
It's never a good idea to hire a tenant rep based on references alone. After all, reps will only give you contact information for individuals that they are certain were pleased with their services. Type the rep's name into a search engine and check out the first two or three pages of results. If the rep works for a firm, do the same with the firm name.
Also, as mentioned earlier, social media sites like LinkedIn can provide you with a good idea of the representative’s reputation amongst other professionals. A search of the brokerage on the Better Business Bureau’s website may also be helpful to find out if there are any outstanding complaints against them.
Industry Knowledge
Tenant representatives need to have a thorough understanding of the commercial real estate industry and the market conditions in the areas that they serve. Asking candidates where they see the market heading over the next year can give you an indication of their knowledge level.
For example, a high-quality tenant rep typically has access to key information regarding economic conditions, demographics, and, of course, market rates for any given market that they operate in.
Good tenant representatives understand the economics of the deals you need done. That understanding will be beneficial from the planning of budgets and overall strategy to lease negotiations with savvy property owners.
If you engage one to handle your whole portfolio of real estate across the country, make sure they either know those markets, and/or be a part of a global network of brokers that will.
Resources Available
In addition to knowledge based on education and experience, good tenant reps will have a wealth of information at their fingertips. If you hire them, a tenant representative should be able to give you the market data that you need to make informed decisions.
A tenant rep who is not only able to provide resources, but willing to sit down with you and help you interpret the information, is more likely to provide you with the high-quality service you need to get the best deal for your company.
Joining You at the Table
A tenant representative's services shouldn't stop when you receive the first draft of the lease from a potential landlord. Look for a rep who will advocate for you during the negotiation process to help ensure that you get the best possible deal. You will need someone on your side from the start, to signing your lease, and beyond.
Many companies will look to their corporate attorneys for the negotiation process. The problem here is that in-house counsel are often already occupied in other legal aspects of the business.
While they may be able to point out certain language that may not be optimal for your company, they are frequently not up-to-date on commercial real estate lease negotiation best practices.
With that said, stay away from tenant representatives who do not actively negotiate with landlords. When dealing with landlords, tenant representatives can often find incentives to attract new tenants. These include “rent free” periods, as well as securing tenant improvement allowances and other provisions. If a tenant representative does not negotiate with landlords and simply acts upon the offered price, it might be prudent to look elsewhere.
Relevant Experience
Experience alone isn't a good indicator of how well a tenant rep broker will fit your specific needs. For example, a tenant rep broker with 20 years of experience representing only retailers is likely not the best choice for a company looking for a large office space or a warehouse.
So, it’s important to find out how much experience candidates have working with companies of your size in your industry and ask what types of spaces they specialize in.
These are just a few of the things that you should be aware of when searching for a tenant representation broker. Need help finding a commercial space that fits your specific needs? Reach out to the iOptimize team today to get started.
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