Why tenant representation is crucial to getting the best lease possible
Driving around town, anywhere you find vacant office, industrial or retail space you’ll also find a sign emblazoned with the company and contact information for one real estate broker or another. These brokers represent building owners, but there’s another type of commercial real estate broker – one that provides tenant representation.
A tenant representative caters to the businesses looking for a place to set up shop. It’s a specialization many tenants appreciate when approaching a lease negotiation. Landlords and their representatives usually bring one distinct advantage to the table: They negotiate leases on a daily basis, while the typical tenant only enters into a lease once every three to five years. Because tenants negotiate leases so infrequently, they’re not as practiced with the strategies that lead to the best outcomes for their needs.
A commercial real estate broker experienced in tenant representation can level that playing field for you with their focused history in negotiating for tenants. Not only that, these representatives know how to comfortably guide you through the whole process of finding and securing a new space or new lease – a prospect that can seem daunting to the average tenant.
The key to successful tenant representation is knowledge. Your broker should know your business goals and thoroughly understand the ins and outs of the local commercial real estate market.
A tenant representative will:
- Assist you in developing a strategic real estate plan that is consistent with your larger business vision.
- Help you determine your particular office space needs, including the type and size of your space.
- Analyze the market and identify potential properties that meet your specific criteria.
- Provide a comparative property and financial analysis to narrow the list of alternatives.
- Work with the landlord to maximize the tenant improvement allowance available to design or reconfigure the space.
- Negotiate as much flexibility in lease terms as possible.
To find a good tenant representative, interview several brokers and ask the following questions:
- Do you specialize in a particular property type?
- How long have you been working in commercial real estate?
- Have you worked with other companies like ours?
- Do you have more experience in certain parts of town?
- How do you find available space?
- Can you provide references for recent lease transactions?
Also ask about their education and credentials. Hiring a broker with the CCIM (Certified Commercial Investment Member) designation will ensure you are getting an experienced tenant representation professional with a proven track record.
Many tenants don’t realize that a tenant representative can also represent clients when it comes to lease renewals. Having tenant representation on your side of the negotiating table will help ensure that your renewal terms are in line with the market and that you are receiving competitive concessions that many renewing tenants don’t realize are available.
In larger markets, the majority of tenants utilize the service of a tenant representative in their initial search for commercial space and a significant number also use them to negotiate lease renewals.
So next time you find yourself looking for either new space or a lease renewal on your current space, consider having tenant representation on your side. Engaging a tenant specialist ensures that your company’s interests are protected and that you find the right location at competitive terms.