Entrepreneur.com posted a great article about the importance for a Tenant to have their own broker representation!
When the time comes for a new business to formally open its doors in a commercial building, most decision-makers will probably consider trying to find and secure office space on their own.
Many entrepreneurs might question why they would need someone to help them especially if they have to pay for the service. After all, they’re putting a lot of money into the business expansion.
But those with experience in leasing and purchasing commercial office space know that finding and securing a dream office is a lot easier said than done. Some business owners who have learned costly lessons in finding their first office opt to hire a tenant or buyer’s broker to help them with moving to their next space.
Savvy decision-makers know that brokers’ fees are included in the overall rent or purchase price (and that the landlord, not the tenant, pays them) so there is no “added expense” in the transaction. In fact, a good broker can save clients thousands of dollars, countless hours and immeasurable risk.
Here’s a look at four issues that can arise if you set out to find office space on your own:
1. A substantial time commitment.
To research properties with vacancies in desired areas will take time — as will calling the landlords and arranging to view the spaces.
You might have to visit these spaces during regular working hours.
You will also be responsible for knowing how much square footage is needed and perhaps the difference between usable square footage and rentable square footage.
Without such knowledge, you’re liable to spend a lot of time viewing spaces that are too large or too small.
Be prepared to spend more time than you might predict in finding available spaces that meet your requirements.
2. The prospect of missing out on properties.
Sometimes very desirable commercial office spaces are never marketed to the public. Commercial real estate brokers in the know about upcoming vacancies can get their clients into a coveted space before it hits the market.
Additionally, many brokers have access to CoStar, which lists commercial spaces available for lease and purchase. It’s the commercial equivalent of the MLS listing service, except it’s not free.
3. Complex issues.
If this is your first time leasing or purchasing commercial space, be prepared for the fact that it’s nothing like renting an apartment, purchasing a house or leasing a car.
There are many factors that might require negotiation, including parking costs and availability, early termination clauses and fees, tenant-improvement allowances, base-year determination, pass-through stipulations and early access to the property. Plus you’ll have to negotiate the rates (costs) and terms (length of lease).
And if you’re purchasing a building, the process is even more complicated.
Even if you don’t have a tenant or buyer representative working on your behalf, the landlord or seller you negotiate with will probably have a broker.
That broker’s job is to secure the best terms for the client, which means he or she will be working in direct opposition to your goals.
What if your tenant-improvement allowance doesn’t cover the remodeling or build-out you need?
And who will help you are required to use the landlord’s contractor at a cost that’s more than your tenant-improvement allowance covers?
What will you do if the space isn’t ready when you need to move in?
When you decide to find space on your own, understand that you’ll be dealing with very sophisticated landlords. If things fall short of what you were promised or expected, you must handle these issues on your own. Without the requisite knowledge and experience to deal with them, you may be up a creek.
Despite all the challenges, many business owners do try to find space on their own. A few of them will be successful. Others may find the experience a complete nightmare when they pay far more than expected, are unhappy and counting the minutes until they can exit their lease or regretting a building purchase.
Still others spin their wheels for a while before realizing they are in over their heads and then call in a tenant broker for help.
Only you will know the decision that’s right for your company. If you do find yourself struggling, frustrated or confused, call a tenant broker who will probably say, “Let’s see how we can make this better for you,” regardless of the stage of the transaction cycle.