Top 10 Things Tenants Should Know About Real Estate (and most don’t).
#10 NOT ALL COMMERCIAL REAL ESTATE BROKERS ARE CREATED EQUAL
In the commercial real estate world, much like the medical field, there are two kinds of professionals; generalists and specialists. The generalists can do everything, from listing a building for an investor to buying a building for an owner/user. Specialists focus on one discipline. Some might only deal with investment acquisitions or dispositions. Others only help companies with their real estate requirements. The latter are called “tenant representatives.” If you needed open heart surgery, would you ask your family physician to do the honors? You’d probably seek out the best cardiovascular surgeon you can find. Your commercial real estate is similar.
If your company needed help with real estate, would you go to a “jack of all trades” or a specialist?
Only a few select commercial real estate companies exclusively represent tenants. Such exclusive tenant reps never work on behalf of owners and developers. Other real estate professionals divide their practice between both tenant and landlord representation. Such division creates a conflict of interest. Where does your broker’s true allegiance lie?
What questions should I ask my potential broker?
Never enter into a real estate transaction alone, even a simple renewal. If you anticipate a real estate transaction in the next 18 months, retain an advisor. Landlords and their brokers are in the business of getting the best deal possible for themselves, not necessarily their tenants. You have your specialty and if you’re reading this, it’s probably not commercial real estate. So, before you engage a broker, here are a few questions to ask.
1. Who do you represent in the transaction, the landlord, the tenant or both?
Dual representation, or representing opposing parties is legal. However, if you were involved in a lawsuit, would you use the same attorney as your opponent or would you want your own representation? Negotiating a commercial real estate lease is similar… having someone representing you and only you will produce the best possible results.
2. What listings do you have around town? How do I know I’ll see everything available, and not just your listings?
You’ll see many signs around town with brokers’ names on them offering space for lease. These brokers are paid by the landlord to get the best deal for the landlord.
By taking listings from landlords, brokers are beholden to them for a major source of their income. Tenant rep brokers never have listings from landlords. Their only loyalty and fiduciary responsibilities lie with the tenant.
3. What is your background and experience?
You will want to understand the depth and volume of their experience in leasing. Have them share a couple of case studies of their problem-solving abilities. Also, a good broker is a facilitator and should ask questions to help you clarify what your specific space needs are, thus potentially saving time and expense.
4. Do you have a specific market niche?
Having a broker that has worked on similar space requirements as yours is vital so that they will not be using you as their learning curve. For example a good broker will have a working knowledge of fire suppression systems in industrial buildings but more importantly, they will know the right consultant to bring onto the team.
5. What happens after the lease is signed?
Any good tenant rep broker will continue to provide ongoing services such as reviewing annual CAM statements. If you have questions about your lease down the road, you should feel comfortable calling them at a moment’s notice.
Using a qualified commercial property broker will save you time and money.
Choosing the right broker will ensure that you have a representative looking out for your best interest. This is not the economy to be making costly mistakes. In your next real estate transaction, don’t go in alone
Choose the right representative.
Your business, your reputation, and your time are just too valuable.
If you have questions about your exact situation, we are happy to answer questions or help you find the right professional that can. Give us a call anytime @ (719) 634-9000.
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