Written By: Casey Howard
I can’t begin to tell you how many times I’ve seen a business owner spend months wasting time with a commercial real estate broker seeking a property to lease or buy and that broker either doesn’t know the market, doesn’t take the time to research comps, pricing, and traffic counts, or doesn’t understand how to effectively negotiate a strong deal for his Tenant. This ends in frustration for the Tenant over not finding a great location or, even worse, frustration over getting committed to a lease term that wasn’t ideal for the Tenant. The funny part….7 out of 10 times, the Tenant chose to hire his Dad’s cousin (or take your pick of any other random family member or friend referred to them), who was licensed back in 1984, and is still “doing real estate” 10 hrs/week while he’s up in the mountains fishing the remaining 30 hrs/week.
First consider your needs. Carefully outline the locations, type of building and space that are most suitable, and the maximum rent you will consider. Do you need the space walk-in ready or would you consider an investment into the configuration?
Come prepared with a list of needs versus preferences, and then interview an experienced commercial real estate agent that can provide the support necessary during the entire process. Prospective tenants may be able to run a successful business but know little on how to negotiate the best terms themselves. Locate a reputable commercial real estate agent to avoid typical pitfalls and close the deal on the right property for you.
How Commercial Real Estate Agents Help
Commercial real estate agents are a better option than looking for properties to lease or buy without representation. Why? These agents can negotiate terms on your behalf and any necessary build-out provisions. With representation, investors and businesses can qualify for rebates for build-out costs, get reasonable repair terms and negotiate lease terms for renewal or items that must be updated prior to purchase.
According to an Inc. article, forgoing a commercial real estate agent placed individuals at a disadvantage with potential landlords. Such individuals were seen as easy targets for unscrupulous contracts, and were also not taken seriously as a company. Eventually, the biggest problem is that proposals were either ignored or individuals were given the run around. When time and effort is money, an agent helps companies meet their objectives faster and locks in better terms.
What to Look for in an Agent
Agents and the brokers they serve can be useful tools in finding the space you need at the right price and in a desirable location. At times when commercial real estate properties are few and the marketplace is competitive for the size and location preferred, a commercial real estate agent can help close those deals. A knowledgeable commercial real estate agent should have:
- Experience in the area of commercial real estate. It may seem like a no-brainer, but it pays to ask. They should have a history of assisting tenants in finding office space and other commercial spaces.
- Closed deals in your desired area(s). Ask if they have experience in commercial real estate within your preferred area and approximately how many properties they have closed on in that area. They will be aware of current practices and what is commonly available at your price point.
- Experience representing tenants directly in commercial real estate transactions. Brokers and agents who work directly with tenants bring more focused attention to the process and are more likely to be located in larger communities. If this option is not available, look for those who work for both landlords and tenants.
- Years working in an established business within your area. Knowledgeable agents can break down the process between landlords and brokers. Real estate agents who have a history of success and are part of a stable company can put the interests of clients first by not rushing negotiations and working toward the best outcome for their clients. Experienced agents have a network of parties that they can turn to for additional services or can share properties that have not yet come to market.
Companies that are considering a commercial real estate agent can first look to other commercial tenants. Word of mouth is a powerful referral system and most companies with a healthy business will be happy to discuss their experience as they also want to build a strong network with other business owners. They can tell you who they recommend, any issues they encountered and what they may have learned in hindsight. Make it easy for yourself by approaching tenants who are within the same industry or niche, so you can assume that their agent is familiar with the types of requests or conditions you may require from a property and landlord or owner.
After creating a short-list of agents, keep in mind any weak points of the agents or brokerage when conducting interviews. Remember, you want a commercial real estate agent who can put your needs and those of your business first during negotiations.