Why Use a Tenant Representative?
Dougall McCorkle, tenant representative
If you are a busy professional, whether an attorney, financial advisor, or corporate head, does it really make sense to take away from your income producing activities or other job responsibilities to spend hours and hours trying to solve your real estate spaces needs when you can engage the services of a true professional that will get you more selection, faster and cheaper? What if I told you that in most cases you don’t even have to come out of pocket to pay for this type of top notch service.
In the world of commercial real estate there are some specialists in the field that devote much of their practice to working with and helping users (tenants) rather than with landlords. These specialist, often known as “tenant reps” will be engaged by prospective tenants to help them relocate their office or store or maybe find new locations for expansions.
Level the playing field-
Unless you are a big firm or company you may not have your own real estate department, while the landlords you may encounter typically deal in leases on an everyday basis typically with their own real estate agents negotiating on their behalf. Accordingly, you may already be at a competitive disadvantage before negotiations even start. With the right commercial specialist on your team you automatically level the playing field and have an advocate on your side.
Market knowledge to your advantage-
Unless you are in the real estate market on a daily basis you probably don’t know the full selection available to you. A good tenant rep should know the every building in your market and the pro’s and con’s of each. He will know what’s available as well as what spaces might be coming available. When I have a new tenant rep assignment the first thing I do is to try to learn as much as I can about the client’s space needs. If it an office client, the obvious questions have to do with the level of qualilty of building expected, the budget anticipated, as well as the staffing. For retail clients there’s a little added skill that comes into play because you’ve got to be able to try to understand the store’s product and customer so that you can help locate a store location that caters to them properly. Part of local market knowledge is also being able to judge whether or not the quoted rents and terms are competitive or not, and if the trend is up or down. As part of the tenant rep’s services, he will guide you through the complete site selection process and then spearhead the negotiation process.
There’s more to a great deal than just the rent-
A real estate transaction typically will include perhaps a dozen or so items that are vital to your lease beyond the rental rate itself. While rent is certainly the main driver, the full picture includes topics such as: space delivery conditions, possible tenant improvement allowances, lease length or term, pass through charges, rent guarantees, future increases, use clauses and exclusive use protections, renewal options, expansion rights, termination rights, and that’s just the start. We have developed a check list of items that we know are important to a client and are certainly worthy of a dialouge to see if they are pertinent to your deal.
Will having a tenant rep cost me more rent?
What you may not know is that in almost all cases landlords have real estate brokerage fees built into the cost of their leases and those fees are paid to the landlord’s listing agent in its’ entirety if you do not have a tenant rep on your side.
What is an “Engagement Agreement”?
For the best interests of both the tenant and the tenant rep broker, we also advise entering into a simple “engagement agreement”. This is usually a short agreement of a couple pages that spells out the services and expectations of both parties as well as the describes the fee arrangements so there’s no misunderstanding when it comes time to sign the lease and get going with your plans. Depending on the size and complexity of the assignment, you should expect that the tenant rep fee will be in the 3-5% range of the value of the lease over the term of the lease. In most cases your out of pocket fee is typically zero, or at most 1-2%, as the landlord and his listing agent usually pays outside tenant rep brokers a split of the fees they pay out in transactions, which gets netted out against the tenant rep or engagement agreement. Regardless, in virtually every case the savings that you are able to achieve in your rent and lease negotiations with the help of your tenant rep will far outweigh any possible costs.
Dougall McCorkle, MBA
Sales Associate and Commercial Specialist
Premier Commercial, Inc., Licensed Real Estate Brokers
Direct: 239.213.7234
Cell: 239.860.3368
dougall@premiermail.net
