One of the most misunderstood aspects of commercial leasing is the use of brokers and representation. It’s important for occupiers of space to understand representation, how brokers can assist in the process, and the costs associated with using a broker. As the market quickly shifts to a landlord favorable market, tenants need a good representative now more than ever.Here are 10 reasons you should use a Tenant Rep:
- Your Tenant Representative is free. This is commonly the most misunderstood aspect of tenant representation. Landlords budget and expect to pay brokerage fees on every transaction. The tenant’s representative will share in the fee already expected by the landlord on your transaction. Your representative will be compensated by the landlord. Not only will a good tenant representative typically be able to negotiate more favorable economic terms, they will do so with no out of pocket cost to the tenant.
- Your Tenant Representative is connected. One of the common issues many tenants have is getting return calls from landlords or landlords’ brokers when the tenant is interested in space. As tenant interest in space increases, landlords and landlords’ brokers become less and less available to meet at spaces and discuss leasing opportunities. A good tenant representative will get return calls, and can coordinate tours that the tenant themselves might not have been able to procure. Your tenant representative knows the players in market, their capabilities, strength of assets, and ability to fill their end of the deal. Your rep also understands how to interact and position your company as a valuable addition to the retail shopping center of your choosing. A tenant representative will know how comparable restaurants and/or retailers are doing in specific trade areas. Your tenant representative should also know the landlords’ strategy for the asset and understand if you should push for a lower rent, free rent, or more contribution based on the landlord’s position in the retail asset. The lowest rental rate is not always the best deal, and a good tenant rep can help analyze varying deals.
- Your Tenant Representative saves you valuable time. Tenants are not real estate professionals; they understand the operation of their business. Utilizing a tenant representative will allow you to focus on operation of your restaurant, retail store, medical practice, etc., instead of learning the ins and outs of retail Lease negotiations. This allows the tenant to focus on their core business rather than the minutia of real estate transactions. Do you understand the application of percentage rent? Do you understand relocation clauses? SNDA requirements? Your tenant rep does and can explain the application to your specific transaction.
- Your Tenant Representative knows how to find the needles in the haystack. Retail tenants are always looking for the perfect size space, at the best location for their needs. As the market continues to tighten, your tenant representative will understand who can accommodate your needs in the market and can find deals that might not be easily recognized as available. They might know a landlord aggressively securing the last tenant so they can sell their asset. A good tenant representative has the capability of finding off market space that driving sites alone may not be able to uncover.
- Your Tenant Representative thinks about additional real estate concerns. A good tenant representative is able to rely on their expertise to determine the best real estate decision making for your business. Is ease of access or high visibility essential for your business? Is a busy shopping center important or are you a unique destination type business sought out by consumers? Is the existing space suitable for your occupancy needs? Is the HVAC old and in need of replacement? A tenant representative will rely on their knowledge to help address concerns that you may have never uncovered or thought of as issues for your real estate.
- Your Tenant Representative gives you more power at the negotiating table. Understand that landlords are always out for their best interest. Most landlords have negotiated countless transactions, while many tenants have only negotiated a handful of transactions. A tenant representative will understand your concerns and help soften the lease transaction. Tenant reps also provide a buffer between the landlord or landlord’s representative, and tenant in negotiations. They allow cooler heads to prevail during sometimes heated negotiations.
- Your Tenant Representative knows the ins and outs of leasing. A good tenant rep has seen countless transactions, varying lease clauses, and a multitude of existing conditions of spaces. Not only do they understand the retail environment, but they know how to navigate specific concerns at a property. They are able to rely on this information and past experience to fight through site specific concerns that arise in every deal. No two real estate transactions are the same, and a tenant representative can help navigate each and every deal to position your business for success
- Your Tenant Representative knows the market and market conditions. A tenant representative can help create an overall market plan for your expansion needs. They are able to look not only at your next addition additional space, but how that will impact future occupational needs. They can look at your existing position in the market and identify opportunities to relocate that might improve your overall market plan. Additionally, your tenant representative knows the overall pace of the market, rental trends, improvement allowance trends, free rent trends, and many other market conditions that should be met by the landlord in a transaction. Do you need to act quickly on an available space to secure that location or can you posture for a better deal? A good tenant representative can guide you through these questions. They will also understand trends in the retail industry. One current trend in the industry is the push to cool, local restaurant concepts in centers that in the past have been designated for national brand names. A good tenant rep can position your business with the landlord to show the positive attributes of bringing your business into the shopping center.
- Your Tenant Representative can help settle disputes that arise after the Lease is signed. While most concerns can be addressed prior to signing a lease, issues sometimes arise after a lease is signed that tenant representatives can help navigate. An advocate on your side can help when a dispute arises in the future. A good tenant representative will keep meticulous records of the transaction, and rely on prior intel about what was agreed to in the lease document. A good tenant representative can also help procure an expansion in the future if your business is busting at the seams, or a sublessee or assignee if the location proves to not fit your model and produce the profitability desired. A tenant rep can also help analyze your lease extension or relocation options after the initial term of the Lease.
- Your Tenant Representative can identify opportunities not clearly visible. In 2009-2013, there were a multitude of available options clearly visible while driving shopping centers. Today, many of the best centers have minimal vacancy and the best opportunities might be spaces that are currently occupied. Large national landlords are marketing spaces that currently are occupied and might not be clearly visible as available. In a tight market, many transactions will occur that never “hit the market”, and without a good tenant rep, you likely will never get the chance to procure your dream site.
ALL TENANTS ARE ENTITLED TO GOOD REPRESENTATION. You don’t need to be a national chain to get representation. Mom and Pop businesses, franchisees, local, regional, and national tenants all need a good advocate on their side to represent their best interest and locational needs.
If you need of a good tenant representative, please call Strategic Retail Group to help identify your next location, relocation, or expansion opportunity. It’s never too early to get an advocate on your side!
Kalen Rickard– Vice President
602-778-3832 | firstname.lastname@example.org