Commercial real estate brokers work with clients to buy, lease, sell or rent commercial property or space. Commercial brokers lead negotiations on behalf of their client and ensure that they are getting the best deal possible. An experienced broker serves as an expert resource in market analysis and analytics. They have excellent referral professionals who specialize in tax and zoning laws, financial analysis, property management and more. A good commercial real estate broker is well-connected with others in the industry and always has a pulse on emerging trends.
For brokers working with building owners selling or leasing commercial real estate, the broker’s focus is on properly marketing the space and using their industry connections to secure long-term tenants or high-paying buyers.
For brokers working with buyers or tenants looking to buy or rent commercial space, their main goal is to find the ideal space for their client that supports the client’s business goals and to negotiate the best possible purchase of lease terms on the client’s behalf.
Business owners save their company time and money by hiring a tenant representative to handle their office space needs, just as they would if they hired a lawyer to help with legal matters or an accountant to help with financial matters. As your representative, we mitigate risk, negotiate the best possible market terms, assist with the tenant improvement process and closing the transaction.
We seek to understand your business goals today and in the future to assess the best solutions for you moving forward. We discuss the pros and cons as to whether it is best to lease directly from the landlord, sublease, or purchase an asset based on your objectives.
An experienced representative for lease, sales and investment clients provides a vast array of services pulling from years of experience and market knowledge that benefits you. It’s not as simple as just showing buildings – a wide array of knowledge is necessary for every aspect of a transaction.
- Property identification
- Accurate and up-to-date market information
- Detailed knowledge of lease documentation
- Expertise in the negotiation process of lease or sale terms or investment purchase
- Comprehensive financial analysis helping clients compare alternatives on an ‘apples to apples’ basis.
- Construction familiarity for tenant improvement negotiations
- Qualified professionals to help with the process such as attorneys, contractors, architects, IT services, etc.
By utilizing the services of a quality tenant representative, a company can reduce occupancy costs, increase profitability, mitigate financial risks and minimize time invested.
Typically, the cost of commission to the listing broker and the buyer/tenant representative is part of the sale price of the property. A seller signs a listing agreement with a listing agent that outlines the commission payment arrangement. If the commission is shared with an outside, or procuring broker, generally the listing agreement authorizes payment to the outside broker. The outside broker is also known as the buyer/tenant representative.
It’s simple, we care about you.
No. This is the single most misunderstood concept in our business.
There are no savings by representing yourself. Without a complete understanding of the concessions available in the marketplace, coupled with the knowledge of where deals are being made in comparable product, you will ultimately miss out on a profitable transaction.
Failing to engage professional representation significantly increases the opposite side’s leverage. No matter how nice they are, you are negotiating with a party that is in the business of exchanging property at the highest profit for themselves.
Per the listing agreement, the landlord pays the full commission whether or not you engage representation. Landlord’s proforma brokerage fees (commissions) into their annual budgeted forecast. It is the cost of doing business. Tenant representation brokers simply share in the listing broker’s fee, which is spelled out in EVERY listing agreement.
When renewing your current lease, expanding, or relocating, it is critical to start early. This allows ample time to ensure a position of strength with the landlord. For small to midsize companies, we suggest starting the process 6 to 9 months in advance of the lease expiration or desired move date. For larger companies, allow a minimum of 12 to 18 months.
The average tenant is not aware of the amount of time necessary to effectively renew or relocate a facility. It’s easy to stay focused on running your business and forget about details such as an upcoming lease renewal. When this happens, tenants are often out of time, substantially decreasing their leverage with the landlord(s).
A seasoned landlord seldom makes a mistake when negotiating a lease.
They are highly experienced professionals, and their job is to make a profit for their investors. The landlord has their seasoned commercial real estate attorney draft the lease and it is drafted in the landlord’s favor. Here are some areas a landlord drafts the lease in their favor:
- Relocation Clause – the landlord can relocate the tenant anywhere in the building with a 60-day notice. The landlord wants this in the lease if they have a neighboring tenant who wants to expand, a larger new tenant wants the space or is willing to pay more money for the location in the building.
- Heating and Ventilation Clause HVAC – the tenant is 100% responsible for all repairs on a NNN lease – even if the units are 20 years old.
- Common Area Share Clause (tenant of expenses) – tenant is responsible for their share of common area expenses based on the percentage of the building leased. If the building is not 100% leased, the tenant is paying for the expenses for those vacant offices.
- In short, a savvy landlord does not make mistakes when negotiating a tenant’s lease.
A qualified tenant rep identifies these clauses for the tenant and along with an attorney, negotiates reasonable language that the tenant can live with.
The first is, not leaving enough time for the process. One of the biggest mistakes tenants make towards the end of their lease term is waiting too long before starting the search for new space or beginning the process of negotiating a lease renewal.
The second common mistake that tenants make is not developing legitimate alternatives to their first choice, whether they are interested in new space or a lease renewal.
Here’s why: landlords watch your actions and can quickly see that you don’t intend to move. At that point, you’ve lost all negotiating leverage. Even tenants who have no reason to move must develop alternatives to their current space, otherwise, they risk paying above-market rents because they forfeit all leverage in negotiating the terms of their renewal.
Tenants often determine that they don’t want to move and plan to renew their lease for another term. Even if you don’t tell your landlord, he will often draw that conclusion from your actions. And once the landlord understands this, a tenant loses their negotiating leverage.
Landlords know it takes time to move a company. They know it takes time to find another office, make any improvements necessary, change your address, notify vendors and everything else associated with an office move. Landlords know that your options and subsequently your bargaining leverage dwindle, as each day passes.
For renewal, please see: “Why I should engage professional representation to handle my renewal?”
Tenants often develop a friendly relationship with their landlord. Remember, your landlord is in the business of leasing property and making a profit. Your renewal proposal will seldom be reflective of the marketplace.
To make an aggressive deal on a renewal, you must create a competitive environment for the landlord. Your landlord must know that you are actively exploring the marketplace, evaluating alternatives, and are willing to relocate should an opportunity present itself.
A renewal should carry fair market terms and include the same concessions being offered to new tenants in a comparable product. Davis Commercial AZ has the experience and knowledge of the marketplace needed to create that competitive environment, ensuring a fair market renewal transaction.