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What you should know about hiring a commercial real estate representative.

After labor costs, a company’s investment in leasing commercial office space may be the next most expensive line item and the decisions made related thereto can significantly impact a company’s profitability.  Hiring the right commercial right real estate representative to assist a company in this process is probably the most important decision a company can make to ensure that the best possible real estate outcomes are achieved.

With the incredible advances in technology and the ability to access information over the past twenty years, the role of a commercial real estate representative has changed dramatically.  Historically, a representative’s primary role was simply that of a broker to identify and show available space to a company.  However, now anyone with a computer can most likely access this information.  Today, a company should seek a representative whose knowledge and experience allows for a more consultative role and the provision of value-added advice and services to allow a company to make optimal real estate decisions. 

In selecting a commercial real estate representative, a company should seek a representative that possesses the following knowledge, experience, and capabilities:

  1. The ability to meaningfully assist in the development of a company’s real estate needs and objectives and understand how they relate to and reconcile with the company’s overall business plans and objectives.
  2. A comprehensive knowledge of all aspects of the real estate market that might impact a company’s criteria development, the structure and terms of a transaction, and the ultimate decisions to be made by a company.
  3. A thorough command of not only all of the terms and issues which are being negotiated but also of the type and perspective of the landlord against which the negotiations are directed.
  4. Superior negotiating skills and use of all available leverage to ensure that the best transaction terms are achieved for a company.
  5. Financial and analytical skills that allow for a clear presentation of comparative information on the properties under consideration so that a company can make a truly informed decision.
  6. An in depth familiarity with all documentation with which a company may interface in leasing office space including proposals, letters of intent, leases, subleases, landlord consents, guarantees, letters of credit, tenant workletters, subordination non-disturbance and attornment agreements, and tenant estoppels.

A company should seek the counsel of a qualified commercial real estate representative not only when considering leasing additional, or relocating to, new office space, but also when considering a renewal of existing office space.  While an existing landlord and its agents may be very “nice” and seemingly accommodating, their fiduciary duty is not to maximize the profitability of the company leasing space, but rather that of the landlord.  In fact, landlords act no differently than other industries in their treatment of renewal customers (e.g., telephone or cable companies) – new customers get discounts and incentives that are not offered to renewing customers.

Hiring a commercial real estate representative does not directly cost a company any money, as its representative is compensated by accessing a portion of the listing broker’s pre-established commission in its listing agreement with the landlord. However, because this pre-established commission cost is factored into the landlord’s rent structure, a company is indirectly paying for its representative thr­ough the rent it pays.  Since this cost is fixed up front by the listing agreement, a company should decide what it wants to get for its money – a broker to merely show available properties, or a consultant that can provide value-added assistance to help increase the company’s bottom line through intelligent real estate decisions. 

Since our inception in 1981, Cassidy & Pinkard Colliers has achieved exceptional results for its clients in the commercial real estate arena. As one of the country's leading full-service commercial real estate firms, our expertise in sales, financing, leasing, property management, project management, and research is second to none.   Contact Paul Darr at (703) 770-3444.  www.cassidypinkard.com.