Hint: It’s not the leasing agent or building owner sitting across you at the negotiating table.
Who represents you, the tenant, when you want to negotiate an office lease in Tucson or elsewhere?
First, we’ll tell you who doesn’t.
Picture yourself in a legal proceeding. You would never hire the same attorney or law firm that your opponent had retained.
Yet many business owners talk to one commercial real estate broker who represents both the building owner and the tenant.
If the IRS were auditing you, more than likely you would have your accountant represent you.
Yet, in commercial real estate transactions, many business owners enter one-sided relationships with building owners as common practice. They do not realize the enormous impact it can have on their bottom line.
In both cases, you would hire experts to ensure your interests are well protected.
Conflicts of Interest
There is an inherent conflict of interest when a tenant negotiates directly with building owners or the leasing agent that represents them.
The primary goal of a leasing agent is to get the best deal for the owner. You, on the other hand, are looking for the most economical lease rate and flexible terms.
To determine whether a broker’s interests are completely aligned with yours, ask yourself these questions:
- Am I getting the broadest spectrum of office space choices, unclouded by any listings, management agreements or hidden agendas?
- In lease negotiations, are my interests being represented without compromise or is the broker influenced by a current or potential relationship with the building’s owners?
- Could there be a real or perceived pressure on the broker to steer me toward certain properties?
- Does my broker work for a full-service brokerage and property management firm?
A company or broker who represents both the owner and tenant is very common in today’s commercial real estate practice.
Yes, it is a conflict of interest. But duel representation is not dishonest or illegal as long as it’s disclosed up front to the tenant.
It is imperative that you understand the implications of this type of arrangement and are aware of the pitfalls.
Depth of Knowledge
No matter how much you trust the landlord and no matter how tempting it is to deal directly with the listing agent, it would be foolhardy to walk into negotiations without leverage and some knowledge of the market, such as
- what space is available
- rental rates for comparable space.
It could take you countless hours, if not weeks, to accumulate this type of information. Even with this information, you will still leave money on the table because you’re unfamiliar with the nuances of lease negotiation.
Someone Who Represents You
You can find someone who will represent you and is free of conflict of interests.
You can employ the professional services of an independent tenant representative. Such a tenant rep carries no building listings nor is affiliated with a building owner.
Full-service firms that have a separate department for tenants and buyers still derive most of their income from property owners. Although their “tenant representatives” might claim objectivity, you cannot be sure that the firm’s profitability or a colleague’s livelihood will not color recommendations and decisions.
Tenant representatives such as Commercial Real Estate Group of Tucson specialize in exclusive tenant representation for commercial real estate leasing and purchasing. They do not own property nor work for any building owners.
These tenant reps have a deep market knowledge that translates to leverage at the negotiating table.
Save Time and Money
The benefits of using a tenant representative can include
- savings on square footage costs
- increases in space improvement dollars
- limits on expenses passed through to the tenant
- coordination of the space planning and construction process.
The result: a significant savings of both time and money to get the office space tailored to the personal and financial needs of your business.
You should not act without professional support on something as vital and expensive as your office space.Commercial Real Estate Group of Tucson specializes in representing tenants and corporate users across the United States. For more information call 520-299-3400.