What Should You Expect from Your Broker?
If you are within a year or less of your lease renewal date you are probably getting a plethora of cold calls from brokers soliciting your business. Real estate transactions do take time and depending on the size of your requirement, it could take longer than you think.
But when you choose a broker to represent you, what should you be looking for? Certainly, if you have been following our Tenant Tactics Blog the first thing you should be screening for is conflict of interest. Does the firm exclusively represent tenants and void of any conflict?
Which leads to the next thing to be looking for? Actually, there are several.
First, what are the services your firm is looking for? Are you looking for an agent who can locate a space and negotiate an acceptable transaction? True tenant brokers will likely have the skill set to put together a transition that meets your firm’s needs and without any conflict of interest. If that is your goal, there are certainly a good number of agents to choose from. Don’t rely on their sales pitch, get a referral from someone you trust.
In a 1993 study conducted by UCI Graduate School of Business Management and Marcus and Millichap Corporate Real Estate Services (M&M), the results clearly showeded that most companies, unless they had a full time in-house real estate department in which their real estate matters were handled, almost always had an individual who had other corporate responsibilities in addition to handling the real estate. Real estate management does not mean just signing a lease. Who helps you in the complex planning process or in managing on going issues and problems that arise down the road?
Why do you have outside counsels, accountants or auditors? Do you have a full time IT person? Do you ever meet with your banker? But when it comes to managing real estate matters, the second largest line item on you budget, who do you turn to?
Is it likely that you simply try and address periodic real estate issues directly with your property manager, or if an issue seems technical in nature, your company might turn to their attorney. But why not turn to your real estate broker? After all, he/she probably
understands the problem, the players and the solutions. Unfortunately, most all firms, including tenant rep firms, are not structured to provide such “pre-transaction” or “after-market” service.
Initially, that division of M&M, where I started my career, was structured to be the outsource for in-house real estate departments. If a client had multiple issues in multiple locations and did not have the manpower to handle all the activity they would turn to M&M. However, it was apparent to me that the firms that really needed help were the closely held companies without full-time real estate departments. Thus, IN/House Corporate Real Estate was formed in 1993 to provide the full range of corporate real estate advisory services at no additional cost to our clients.
About 60% of our time each day is spent dealing with tenant-landlord issues. We often find things that frankly, landlords assume the small tenant will just accept despite the fact that errors may be involved. We address anything from lease interpretations to operating expenses saving clients not only time and money but the headaches of dealing with issues not within their core business. Often attorneys call us with real estate issues for their clients; issues that might be either outside their expertise or seeking guidance about how the market might address an issue.
Before you make your final choice on a commercial broker know if the agent has any actual or perceived conflicts of interest, understand her/ his level of experience as a tenant broker and evaluate the services you wish your broker to provide before, during or after any transaction. Remember, it’s your business.