The commercial real estate (CRE) process can be complex and confusing particularly if it’s not part of your normal daily routine. Understanding the benefits of using a Tenant Representative Broker like Jackson Cross Partners makes the complex world of commercial real estate easier and more advantageous to the Tenant.
For example, within the Anatomy of Base Rental Rate or “Market Rent” there is a line item referred to as commissions which is intended to pay for all representatives of the Landlord, with the Tenant ultimately being paid by the Landlord. Not having a representative at the table during a site search and negotiations could cost you thousands, if not millions of dollars, and is not worth the risk of missing other important economic issues, such as free rent concessions, Tenant improvement allowances, operating expense exposure, and default protection.
When working a deal, the Landlord and Tenant’s financial objectives will sometimes conflict. While the primary goal is the same, to occupy a preferred property, the non-economic business issues such as suite location and signage can be a conflict that is often overlooked by a less experienced representative. Also, the Landlord’s representative has a fiduciary responsibility to the Owner and not to you. If you noticed, a Landlord almost always have their own representative in the form of listing agent or in-house staff. If they don’t, the Market Rent number is never reduced to reflect “less” fees being paid. When a Tenant signs a lease without representation, either the third party agent earns the fee; the Landlord agent earns a bonus based on “margin”, or it goes back into the Landlord’s pocket. Prior to any negotiations, the fee is part of the transaction cost structure.
To guarantee the highest quality outcome, leasing space in any market is a process. A Tenant representative must have a thorough system, such as Jackson Cross’s 20-point process which is customized to meet the client’s objectives. Aspects include requirement definition, locational analysis, market research, intelligence and concession packaging. Technology enhances the data. The better the data, the better the decision. Also, JCP works with legal counsel to manage document review and preparation, minimizing legal expenses. A good broker has a professional network, including real estate attorneys, architects, furniture vendors, contractors and telecommunication/data/IT support professionals. Like any process, it takes time to develop, leverage, and negotiate a high quality lease. Most clients underestimate the time and energy necessary to bring a lease negotiation to a successful conclusion. It can be contentious at times, so a reasonable professional should be on the point, acting as a buffer between Landlord and Tenant. Once the transaction is complete, the Landlord and Tenant can work together for the duration of the lease term.
While you may think you can save a brokerage commission, the fee is in the deal. Shouldn’t you get the benefit of it?