Real estate is one of the most important facets of just about any business. Yet, when looking for space, many corporate executives and business owners forgo hiring a tenant rep and choose to go at it alone. Some think the service is an unnecessary expense. Others believe a tenant rep is just another broker looking after landlords’ interest. And then, there are the know-it-alls, who think they can do just as good of a job at finding the perfect location on their own.
These assumptions, however, are inaccurate, and businesses that choose to handle their real estate needs in-house end up missing out on a number of benefits of working with a seasoned tenant rep.
First and foremost, the service is completely free to the organization leasing the space. Tenant rep brokers get reimbursed for their work in the form of commission, which is paid by the landlord once a lease is executed.
Second, tenant representatives work exclusively with tenants; therefore their sole interest in the transaction is to secure the best possible deal for you as the tenant. Most brokers represent one or more landlords, and that creates a conflict of interest if they choose to also represent tenants in lease transactions. CCIM estimates that only 3% to 10% of brokers represent tenants exclusively.
Lastly, there is a lot more that goes into signing the best office deal in town than touring a couple of properties and haggling with the landlords. A knowledgeable tenant rep will be able to guide you through the entire process as outlined in the following sections.
Space Requirements Assessment
Oftentimes companies don’t have an exact idea of how much or what type of space they need. Or even worse, they mistakenly think that they do. Tenant reps have overseen hundreds of lease transactions and gained invaluable knowledge in the process. They can lend a fresh pair of eyes to your business real estate strategy, point out pitfalls, and suggest better solutions before you even begin looking at properties. Furthermore, with the proper requirements in hand, it is much easier to narrow down a list of potential properties.
Market Research and Properties Shortlist
The tenant rep will be able to generate a list of potential locations that fit your exact space requirements. It is also worth noting that tenant reps employ multiple sources to generate their lists of prospect buildings. They use their local market knowledge and industry network to bring you unadvertised properties, and even buildings that haven’t been vacated yet. In a seller’s market, that may make the difference in securing the best location before someone else.
Handling property tours on your own can certainly become overwhelming, especially if it entails touring multiple locations across the country. Tenant reps can take the headache out of this process too. They can handle the tour arrangements with each landlord, and then accompany you during the meeting. Your tenant rep will point out the pros and cons of each property, including things you may have missed if you were touring on your own.
While this is one of the more widely recognized aspects of the tenant rep’s job, it is worth reiterating the importance of having a strong negotiator on your side of the table. Even $1 difference in the rental rate can equate to thousands, or even hundreds of thousands of dollars in savings for your company over the term of the lease. Tenant reps have years of experience negotiating with tough landlords and oftentimes can secure a much better deal. In addition to more favorable rental rates, your tenant rep can help you get a higher tenant improvement allowance, better building signage, more flexible renewal terms, and more, while ensuring you haven’t overlooked some obscure detail that’s going to cost you down the line.
Tenant representatives have a wide network of industry contacts including architects, builders, and interior designers, whose help you will most likely need when building out your newly leased space. Not only can your tenant rep put you in touch with reputable construction service providers, but can possibly make recommendations on the layout, finishes, and other aspects of your build-out project based on their years of experience with other tenants.
Future Asset Management Guidance
You can continue using the services of your tenant rep well after the lease has been signed and the build-out dust has settled. Tenant representatives can help you re-evaluate your real estate plans periodically, optimize your portfolio for the long term, and dispose of any unused assets when needed.
As you can see, utilizing the services of a tenant representative can potentially save you tons of time and money, while also sparing you all the headaches of commercial real estate leasing. If you agree that your time would be better spent on running your business instead of browsing through real estate listings, scheduling property tours, and haggling with landlords, consider contacting one of our experienced tenant representatives for your office space needs.
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