With all the information on line, many tenants are searching for office space without a broker. Can you imagine? I Can.
I get calls from tenants that are frustrated. The office market data is often out of date and many leasing options are not visible without a subscription. Beyond the lack of good data, tenants complain about the amount of time required to sort through all the information. Once I explain the benefits of working with a knowledgeable broker, tenants usually breathe a sigh of relief. They quickly realize they do not pay the broker directly for office leasing assistance.
Who Pays for Tenant Representation?
Nothing is free, but hiring a broker is as close as it comes. A tenant representative gets paid by the landlord when a deal closes. It works much like a residential agent representing a homebuyer.
Finding space and negotiating a lease renewal can be complicated. That is another reason to hire a broker. Finding space is only the beginning. A broker knows what is actually available and which landlords are reasonable to work with.
Planning Ahead Creates Leverage
Many office users need guidance even when they have no plans to move. Over 50% of the clients I represent need to deal with their office needs years before the lease expires. Occupiers outgrow their space, so they need to sublease and move, or they need to expand and extend their lease. Some tenants need to consolidate. What happens when business slows down, and you need to cut your real estate costs? What is the best way to go? Well, a good commercial agent will help you evaluate all the options. Once you have weighed the options you can move forward – with a clear objective in mind. We recently completed a lease restructuring for a tenant with nearly five years remaining on its lease. The company expected to need 50% more space within a year, so we negotiated an early extension and expansion. Had the tenant waited, they would have been reacting and they would have had much less leverage in negotiations.
Why Smart Business Leaders Use Tenant Representation
Business leaders do not achieve success by accident. They make deliberate decisions and seek expert advice when needed. Success is a deliberate process; so is dealing with commercial real estate. It is no accident that most these smart business leaders hire a commercial agent. It just makes sense.
Tom Bacon, CCIM, has been assisting commercial real estate clients in Sacramento since 1991, with an emphasis in office properties and Occupier representation. Click on the link to subscribe and download the free Commercial Real Estate Leasing Guide.