Your lease is up for renewal, and things seemed a lot simpler when your business was younger. Your landlord has befriended you over the term of your lease up to a point. An offer to renew your current lease gives you pause, especially during today's volatile economic climate.
As in all professions, specialists bring to the table a savoir faire and best practice techniques to make a difference in your bottom line. In commercial real estate, brokers with a focus on tenant representation make a difference in both fundamental approach and final outcome. Here are some of the advantages:
1. Tenant brokers know how landlords think and the best way to leverage it.
Quality brokers understand the forces driving landlord decisions and can focus on the appropriate ones to gain the best deal for their clients. This process can encompass expertise with regional markets, competition with other landlords and the ability to present their client in the best possible light.
2. Tenant brokers even the playing field.
Typically, landlords gain the upper hand in the negotiating process when tenants negotiate a renewal without a broker. Landlords' experience with multiple clients, knowledge of lease clauses and ability to wait out their tenants can create a significant advantage. Tenant brokers know how to separate nonnegotiable elements from a well-played bluff.
3. Tenant brokers avoid conflicts of interest.
Brokers who represent both tenants and numerous landlords are inevitably confronted with situations where they show space to tenants in buildings they represent, thereby creating a classic conflict of interest. Brokerage firms that represent none or only a few landlords avoid this situation and thereby create maximum leverage for the tenant.
4. Tenant brokers understand the impact of office layout, location and amenities.
Certain factors, unique to the corporate tenant, must be considered when determining whether to renew your lease or explore new sites. For example, by relocating to another building, the benefits of the ease of your employees' commute and/or building amenities (such as an on-site cafeteria, fitness center and shuttle service to the train) may be neglected by even the most beneficent company.
5. Tenant brokers can analyze your lease with a fine-toothed comb.
Tenant brokers understand the most important contingencies to include in any lease as well as the benefits accruing to both you and the landlord. Typically, an area where landlords enjoy the most advantage, lease clauses can be carefully examined by tenant brokers who close the knowledge gap and ensure their clients understand the document before they are bound for several years into the future.
6. Tenant brokers understand how tenants think.
Tenant brokers understand your needs and will bend over backwards to meet them. Their business model depends on your repeat business and referrals for continued livelihood.
7. Tenant brokers form natural alliances to help their clients.
In an effort to maximize the deal, tenant brokers will often consult with related professionals such as architects and real estate lawyers. They will form a negotiating team to ensure your interests are zealously protected.
8. Tenant brokers are experts in building assessment.
Thanks to their knowledge of the market and constant evaluation of commercial sites, tenants brokers understand the pluses and minuses of your current or future headquarters. Items such as adequate parking, square footage loss factors and the design, layout and shape of the proposed office can be significant factors in comparing a renewal vs. a relocation .
9. Tenant brokers believe in what they're doing.
The ability to advocate for the little guy and the feeling of shared purpose, often among entrepreneurs at a similar level of development, means your tenant broker will identify with your company, thus increasing the likelihood of a full-court press on your behalf.
10. Tenant brokers keep you informed.
Things change. The value of your headquarters five years ago may decline due to industry developments, market variations, etc. Tenant brokers keep up-to-date with availability, infrastructure and many other factors affecting a renewal or search for a new site.
Tenants negotiating a renewal may encounter a number of complex decisions affecting their business for years to come. A real estate broker focusing on tenant representation will offer a unique focus and expertise in these areas.