Know whether the broker you’re interviewing to help you find Tucson commercial space for rent is working in your best interest.
Landlord brokers generally do a great job representing landlords. That’s what they’re paid to do.
So don’t be surprised if the advice that landlord brokers give you don’t serve your interests as a tenant of Tucson commercial space for rent. Here are the eight worst kinds of advice you’re likely to hear from a dedicated landlord broker.
“We can get you the best deal because we know the market.”
Knowing the market does not translate into negotiating the best lease for you.
Landlords let a lot of brokers know about their available commercial space for rent through frequent mailings, social media posts and real estate databases that all good brokers subscribe to.
A lease goes wrong for the tenant not because the broker didn’t know the market, but because the lease was not well negotiated from your perspective.
“We can get you a great deal because we have a relationship with the landlord.”
If your company has the creditworthiness that suggests you can meet your lease obligations, then any landlord would love to have you as a tenant. The suggestion that you need some kind of “in” to do a deal is ridiculous.
When a broker entices you with claims of a special relationship with the landlord, ask whether that relationship will affect that broker’s obligation to represent you.
What your company really needs is a broker who will amicably and professionally represent your interests, not the interests of a landlord with whom a broker has a relationship or hopes to build one.
“We can provide great service because we have a lot of branch offices.”
One doesn’t need branch offices to identify commercial space for rent in another city because landlords list their availabilities through brokerage networks and databases.
The key to signing a good lease is having good
- site analysis
- lease analysis
- lease negotiation
These depend on the caliber of the tenant representative, not the location of the offices.
“Don’t upset the landlord.”
You’ll often hear from landlord brokers that you shouldn’t
- negotiate aggressively
- demand that landlords comply with lease terms
- insist on the rights provided in the tenant’s lease.
Our experience is that landlords respect tenants who know their rights and pursue their interests in a business-like way.
While it’s true that as a tenant you often need a landlord’s cooperation, it’s also true a landlord needs a tenant to help pay the mortgage.
For the landlord, it’s generally cheaper to keep a current tenant satisfied than to incur the cost and possibly lost income from having a dissatisfied tenant move out.
“Hurry up and get the deal done.”
More than anything else, landlord brokers push tenants to get a deal done quickly. They present a sense of urgency that if you don’t commit to a space now, somebody else will take it.
Hurrying into a deal is a big risk to you. You could end up
- neglecting comprehensive due diligence
- overlooking costly drawbacks in a building
- failing to properly analyze the risks and total costs of a landlord’s draft lease
- signing a transaction that can become a serious liability to your company.
“Since you’re such a big tenant, you have very few alternatives.”
While it’s true that a large commercial space for rent in a particular area may be limited at any point in time, this does not mean you must accept whatever terms landlords of those spaces care to offer.
It’s critically important for a large-space user to start site search early. A million-square-foot tenant should start at least five years before the current lease expires.
Starting early means you’ll be able to see more spaces and include options that require building from scratch, thus greatly expanding your alternatives.
“The landlord’s draft lease is boilerplate, standard terms.”
So-called “standard terms” invariably mean pro-landlord terms because leases are drafted by landlords, who are naturally protecting their interests.
“Standard terms” often includes tenant budget-busters like operating expense loopholes, vague landlord performance standards and lack of audit rights.
Don’t be pressured into accepting “standard terms.” A lease negotiation should be driven by your business objectives, not by a landlord’s desire to avoid risk.
“Focus on rent and workletter. Let lawyers take care of the fine print.”
Many corporate executives imagine they’ve locked in their biggest costs by shaking hands on these two terms. However, the rest of the lease is loaded with costs.
There easily are 18 or 19 significant non-rent costs in a typical lease and it’s contrary to the interests of landlord brokers to identify these costs.
Lawyers don’t provide complete protection for tenants because they aren’t trained to analyze business issues that are responsible for so many excessive lease costs.
For instance, lawyers don’t claim to know how the current real estate market reflects on the draft lease. They aren’t experts on the economics of building operating systems and aren’t expected to know how various ways of charging for electricity will affect costs.
How to Protect Yourself From Bad Advice
The most common reason tenants take bad advice from landlord brokers is that they’re impressed by the big deals they’ve done.
But as talking points, big deals are meaningless unless they’re good deals for tenants.
When you are interviewing a broker of Tucson commercial real estate, don’t ask what deals the firm has done. Ask how well it’s protected tenants in such issues as
- analyzing sites
- evaluating landlords
- negotiating leases and other kinds of real estate transactions
- monitoring build-outs
- auditing billings.
The answers should quickly reveal whether that broker will work to protect your company’s vital interests.