By James A. Schnur, CCIM
President and Designated Managing Broker
Integrated Real Estate Solutions
The process of finding and leasing the right space for your business presents a variety of complex challenges. Understanding your options for managing costs, enhancing the property, and ensuring the property is going to meet both your present and future needs is the job of a commercial real estate tenant representative.
What does a tenant representative broker do?
Identify the best location, location, location.
We recently worked with a client who was growing out of their distribution center space and needed to relocate into a larger facility. Initially, they wanted to be very close to their current location; however, after careful consideration of the local real estate sub-market conditions, we provided an alternative. The location was a bit farther than they initially desired, but offered better highway access and economic incentives that otherwise would not have been available. The choice saved this company significant money in initial investment and in distribution costs, given the better access.
How does location play into your business plans? Do you rely on convenience, like, ample (and free) parking, and proximity to other businesses that could draw potential customers to you? Proximity to your target and existing customers? Do you need easy access to transportation for incoming and outgoing shipments? Do you know what areas are being considered for new growth, government incentives, and which areas might present obstacles to your business?
A commercial real estate tenant rep broker is in the business of “knowing”. Every day, they invest in studying the market, looking at property, getting to know developers and landlords. This networking gives an experienced tenant rep valuable insight into what might be coming on the market and locations with great potential that might otherwise be overlooked. With a decision, as critical as a company’s location, this degree of specialization is critical to avoid mistakes that can be very costly—in terms of the business’s revenue and its brand.
Provide years of relevant experience.
Some companies opt to assign the task of finding office space to a staff member. It could be the CFO, COO, Warehouse Manager, Distribution Manager, or someone else who is integrally involved in the day-to-day operations. While that expertise qualifies them to know the needs for the next property, they probably aren’t adequately schooled in the commercial real estate negotiation process or the options that might not be offered to someone who doesn’t know enough to ask. Is the person in charge of your relocation well-versed in the pros and cons of lease versus own? That knowledge is key to your relocation plans.
This depth of knowledge and experience the tenant rep broker provides also saves the company valuable time. When you don’t conduct relocation searches on a regular basis, you may not be aware of the details involved in finding the properties and the extensive communication that requires your attention. Please see When Real Estate Won’t Wait.
It’s best to let professionals do the jobs where their expertise delivers the best results. For business relocation, that’s an independent commercial real estate tenant rep broker.
Negotiate the terms.
Do you know the difference between “triple net” and “modified gross”? A developer or landlord does. He also knows which structure is more beneficial to his bottom line. Some businesses want to limit capital expenditures during a move. Some owners want infrastructure enhancements, and need to negotiate the cost and concessions with the property owner. A tenant rep broker can also guide the agreement to minimize the management fee and control its increase in the future.
Without a specialist handling the negotiation, you’ll likely miss out on options that could deliver significant benefit to your business—options that a landlord might not freely offer because of the benefit to them, not your business.
Provide a valuable service at no charge to you.
You should have an agent who represents your needs, and only your needs. A commercial real estate tenant rep broker is paid by the landlord—not you—after your lease is negotiated and signed. In fact, the commission is already factored into the leasing cost, so when you don’t use a tenant rep broker, you’re not saving any money. You will just be allowing the landlord’s agent to make more money—working to enhance the landlord’s position—while giving up the value of the leverage provided by a tenant rep working to further your interests.
Maintain ongoing support with tenant-landlord issues.
It can be unpleasant when you have a dispute with your landlord. Let your commercial real estate tenant rep broker advise you and perhaps intercede on those disagreements. The landlord might see you as one tenant, but the tenant rep broker represents the possibility for many more.
If the dispute cannot be resolved, your tenant rep will guide you through your options and, if necessary, find a new location.
Before you decide on the person who will guide your business relocation, be sure that the professional you choose has the experience, knowledge, and commitment to your needs that will deliver success. And make sure your tenant rep broker asks you this question.
Integrated Real Estate Solutions, Inc. provides clients with the in-depth knowledge and experience that is critical to determine the right path to your next move, lease renewal, or strategic repositioning of your real estate portfolio. Contact us or call 847.550.0160 today about your needs, and put our success to work for you.