Who Needs a Broker?

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 The office market data is often out of date and many leasing options are not visible without a subscription.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 talk with a tenant about the benefits of working with a knowledgeable broker, the tenant breathes a sigh of relief; particularly when they realize that they don’t have to pay the broker to assist with office needs.

Nothing is free, but hiring a broker is as close as it comes. A tenant representative gets paid by the landlord only when a deal is done, similar to how a residential agent gets paid when representing a buyer.

Another reason you hire a broker is because finding new space and negotiating a new lease or a renewal is complicated. Finding space is just the tip of the iceberg, and a when you work with an agent you save time because the agent knows what is actually available, and the agent knows which landlords are “reasonable” and those who are not.

Many office users (occupiers, tenants, owner users,) whether they lease or own, need guidance even when they don’t need 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 are just finishing up a lease where the Tenant has nearly 5 years left on their existing- they anticipated that they would need about 50% more space a year from now, so we negotiated an extension and expansion that included a significant tenant improvement allowance. Had the tenant waited, they would have been reacting and they would have had much less leverage in negotiations.

Business leaders, Executive Directors, Partners, all the C level execs, are smart – and they have not gotten to where they are by accident. 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.

Should You Rent or Own in Sacramento’s Core?

As Sacramento’s skyline continues to welcome new additions and development is spurring increases to property values in the Downtown region, one may be curious as to what the changes mean to their ability to acquire property. Renting and owning property both come with benefits and disadvantages, so which is the better option? Review of Sacramento’s Business Journal’s year-end commentary on renting and buying property in Sacramento reveals several takeaways including:

1.) More often than not, it’s cheaper to rent.

2.) This trend is expected to continue over the next 3-5 years

3.) Meaning more opportunities for apartment developers and investors

Currently, monthly mortgage rates take 32.9% of the median family’s income after a 3.5% down payment; while renting a 3-bedroom apartment takes 26.4% of the median family’s income. This gap is expected to get bigger, in favor of renters. Home prices are expected to increase, along with rental rates – but at a much slower rate. Currently it is less expensive to rent than to buy in the following zip codes: 95818, 95819, 95811, 95816.


Politics are a driving factor in pricing of rental properties, rent prices, landlord’s incomes and their affectivity. The Sacramento Community Stabilization and Fair Rent Charter Amendment recently qualified for the 2020 city ballot and will strive to accomplish the following:

  • Cap rental increases at 5%
  • Annual rent increases would be tied to the Consumer Price Index, with a minimum increase of 2% and a maximum of 5%;
  • Restrict landlords’ ability to evict by requiring certain criteria to be met;
  • Require landlords to pay rental assistance of at least $5,500 to relocate a tenant if the owner wants to do substantial repairs, move in, take the unit off the housing market or demolish it;
  • Establish independent rental housing Board to govern over rent adjustments;

Groups favoring this bill include labor unions and various housing advocates.  

Many businesses, developers and apartment owners oppose the bill; these groups feel that this bill would only deter landlords from maintaining rental properties. Mayor Darrell Steinberg has also expressed concern that the bill could result in less affordable housing construction. Mayor Steinberg does support temporary rent control that would only apply to at least 20-year old buildings.

19th and J Street

The new additions to the Sacramento skyline will surely impact the market and will pose drastic changes to the way of life in the Sacramento Core; one should consider the pros and cons of renting and purchasing in the current climate. Got questions? Call us at (916) 930-0001, or check out our website, https://sacramentobacon.com/