Chris Carmen / February 14, 2020
Hiring a tenant rep broker is the BEST thing you can do when beginning to start the search for new office space. Without one, you are putting yourself at risk to be taken advantage of by Landlord’s. You don’t know what you don’t know, and as a tenant rep broker we are here to advocate for your needs, wants and goals.
Here are the 8 reasons why any company considering an office relocation should hire a Tenant Rep broker.
- Protects your interest.
- This very important point, ‘Tenant Rep Brokers represent the interests of office and industrial tenants ONLY, NEVER landlords’, gets to the heart of how we differentiate ourselves from traditional full-service commercial real estate brokers. Full-service commercial real estate brokers represent both tenants and landlords and subsequently, often put themselves and their firms in a clear conflict of interest.
- Creates Competition
- In order attain the best economic and business terms when negotiating a new office lease or office lease renewal, it’s imperative for a business to leverage competition among landlords. But you have to be smart…. get your office search started with plenty of time prior to the expiration of the existing lease. 9-months is a good starting point when considering an office relocation, but equally important when planning to renew an existing lease. If you don’t leave yourself with enough time to actually relocate the office, your existing landlord will know you’re bluffing, and you’ll lose the leverage of your existing landlord knowing you could vacate. Remember, when negotiating a new lease or a lease renewal, time is your friend. The longer the negotiation of lease terms lasts often correlates to how well you do on the lease economics.A tenant rep broker is always advocating on your behalf. Essentially, will leverage the strengths of your business in order to create a sense of competition for your tenancy on the Landlord’s side.
- Access to all possibilities
- Locating office space is not as obvious as it might seem. When an organization considers leasing office space, the possibilities consist of: current vacant suites; space currently leased by tenants that have plans to vacate, or; suites that have been vacated by tenants prior to lease expiration and continue to pay rent. Only space that is currently vacant and available is obvious to the outside world. Yet, all three of these scenarios present opportunities for businesses searching for office space. The truth is that we don’t know what we don’t know, and businesses that lease office space roughly every 3-8 years and sometimes as infrequent as once every decade, are unaware of the market dynamics and the full spectrum of opportunities available to them. Commercial real estate brokers, particularly Tenant Representatives, are actively engaged in the market and lease space for clients every day. Shrewd business owners and managers are keenly aware of what they don’t know and make sure they find specialists that can add expertise for tasks they lack knowledge and experience. Businesses should engage a Tenant Representative, a broker specializing in representing tenants when considering an office relocation.A lot of available office space is often hidden from public view, meaning you could be missing out the perfect space for you. Not only does a tenant rep broker have access to all opportunities on the market, we often have knowledge of available space coming on the market BEFORE it hits a commercial real estate listing database (meaning… before it gets in the eyes of other brokers) through lease expiration knowledge & relationships in the community.
- SAVES TIME
- This reason is probably the #1 most underestimated issue affecting businesses when undertaking an office relocation. Most business owners, C-level leadership, and managers are already short on their most valuable resource…TIME. When done properly, the typical office relocation will require researching the market, touring office properties, working with designers and architects, negotiating the economic and business terms of the deal, negotiating the lease document, construction of interior improvements, evaluating and shopping for FF&E (furniture, fixtures, and equipment) for the new office, planning the IT take-down and setup, and all of the other miscellaneous tasks associated with a move. From start to finish, the relocation will require a minimum of 6 months and more often 9-12 months. Now consider that company leaders are almost always pivotal to the organization’s success and as mentioned earlier, time is their most limited resource. This is especially true in small to medium size organizations. With that said, how can these leaders dedicate 6-12 months to a non-core task without causing a setback to the business and in some cases, even causing harm to the business? Leaving the legwork to the professional is not only smart, it can be imperative to a business’ success.
- KEEPS RECORDS
- During my 34 years in commercial real estate, on the landlord side of the business and for the past 26 years as the founder of CARMEN Commercial Real Estate, an office tenant advocate broker, it never ceases to amaze me how many hard fought lease negotiations I’ve had side-by-side with some of the very best business people. We fight tooth and nail for options to renew, expand, contract, terminate the lease, etc. all which have critical dates attached to them and then these same business people drop the ball by missing their “Critical Dates”. But how can you blame them…they are and should be focused on their core business…selling software, equipment, financial services, etc. It didn’t take me long to figure out that we needed to do this for our clients…essentially becoming their “virtual real estate department”, making sure our clients got everything they fought for during the lease negotiation. Today, CARMEN employs a full-time Lease Administrator to manage our clients critical date and lease details, that if neglected, can cost a business a tremendous amount of money. Facility lease costs make-up 5-9% of businesses overhead. A competent Tenant Representative will assure the expense is managed and your business can maximize the benefit of your office.
- MAXMIZES BENEFITS
A Tenant Rep Broker will ensure you get the maximum economic benefits from your lease, whether that is free rent on the front end or above standard tenant improvements. Other incentives, such as fitness center memberships or free conference facility uses, are items the tenant rep broker knows to ask for and negotiate into your lease on your behalf.
- ITS ALL ABOUT YOU
- A Tenant Representative Broker, or what is often called a “Tenant Rep” is just that, a commercial real estate broker that serves the needs and looks out for the best interests of its clients, which are commercial tenants. In the case of my firm, CARMEN Commercial Real Estate, we exclusively represent office tenants. Traditional full-service brokerage firms can’t necessarily make that statement because their focus is on building listings, while also representing tenants. When a Tenant Rep, like CARMEN Commercial, represents tenants…it is all about the tenant and negotiating the best possible terms we can. Our bias for our tenant clients is never clouded by serving other stakeholders, i.e. landlords and other brokers. We don’t worry about hurting the landlord’s feelings when negotiating on a tenant’s behalf, because we NEVER work for landlord. We ONLY work for the tenant.
- EXPERTISE AT NO COST
- Landlords pay all of the real estate brokers involved in a lease transaction…. their listing broker and the tenant’s broker. A tenant does not pay its broker. So it’s logical to ask “If the landlord doesn’t pay my broker a commission on a lease transaction, the landlord will save money…. so won’t I get a better deal?” To answer that question, first examine how brokerage leasing commissions work across the US: Landlords hire listing brokers to lease their space and pay them a commission to do so; when a company/tenant is represented by a broker, it shares in the commission paid to the listing broker; if a company does not use a broker, the landlord’s listing broker keeps the entire fee. Therefore, no, the landlord’s cost is not lower and no, you will not get a better deal. In fact, to the contrary…when a company doesn’t use a broker to negotiate on its behalf, it will pay more.Over 27 years of representing tenants, I’ve found that we save our clients 10-25% in rental cost vs. companies that don’t use a broker and therefore, lack information and expertise when negotiating an office lease. It would be a little like representing yourself in court because you want to save on the cost of an attorney….. Never a good idea!