Is Market Knowledge That Important?
A headline like this will likely turn a few heads. After all, one of the major selling points that most brokers highlight in their pitch is how well they know the local market. Brokerage firms that have multiple offices often promote that fact to attract clients with locations throughout the USA.
We are not downplaying the importance of local knowledge, but we will take a position that as a pure tenant rep, knowledge of the tenant may be the more important issue.
In today’s world of instant information it is not difficult within a few strokes of a keyboard to get general data about most any market.
A Real Time Example:
IN/House is in Irvine, CA. It is our only office. So, what happens when a client has multiple offices in cities throughout the US? How does a client get solid information and put together a transaction within market parameters and most critically, that meets the needs of our tenant/client?
One client had corporate headquarters in Irvine but wanted to open sales offices throughout the U.S. The first additional office was to be in San Diego. The final location chosen was a space that was in shell (not yet built out) condition. We designed the space as a model for future offices and structured a deal that met our client’s short and long-term goals.
Using that deal structure and layout as a model we proceeded to open 41 additional offices throughout the U.S.
The process was simple. Once the client identified a market they wanted to be in we obtained some general information on the market including economic parameters and the names of the active listing agents in the area. It took only a few calls to local brokers to learn all the good things about their listings…and all the “bad” things about the competing properties. We continued this process with multiple local brokers until we had a clear focus of each market.
Next, we found a qualified local tenant broker to engage as our “feet on the ground” to be our eyes and ears as well as to guide us through any idiosyncrasies of the market. Of course, we shared a portion of our fee with them.
It is very typical, even within large firms that have multiple offices, that the agent who manages the account shares fees with the local agent. Either way, the key to the success of this process is that the project is completely managed and monitored by one contact point. All proposals were drafted, and leases were reviewed by our office. We provided the co-operating agent with floor plans based on that San Diego model and the proposals reflected our client’s needs. If there was a deal point which was contrary to local customs, our co-operating agent would give us guidance. As in any of our transactions, we obtained at least three options to choose from letting the market compete for our business.
Once the initial choices were narrowed down to 5-6 spaces, I visited the sites with the
local broker. By the time the plane landed back in California, the three Letters of Intent were drafted and quickly approved by corporate and the local manager as well.
In today’s world of instant communication there are rarely, if ever, any secret listings. No listing broker would ever want it to be known that he/she held back an offering just so they could maximize their personal commission. In fact, quite the opposite is true. At times we contact a broker regarding a space listed on many of the proprietary data bases only to be told by the broker that another premise will be coming on the market that might work for my client. If it’s out there, your broker will find it.
From the Tenant’s perspective, commercial real estate should be about meeting the needs of the tenant no matter where they are located. That’s the underlying premise of all the deals we deliver to our clients.