In a legal proceeding, you would never hire the same attorney or law firm your opponent had retained. And if you were being audited by the IRS, more than likely you would have your accountant represent you. In both cases, you would hire experts to ensure your interests are well protected. Yet in commercial real estate, many business owners looking for office space enter one-sided relationships with building owners as common practice. They do not realize the enormous impact it can have on their bottom line.
Avoid 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 building – tenants,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, you should 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 buildings 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? In Colorado, transaction brokerage (representation of both the owner and tenant) is very common in today’s commercial real estate practice in the Denver Office Market. Although this borders on being a conflict of interest, transaction brokerage is not dishonest or illegal as along as it’s disclose up-front to the tenant. It is however, imperative that tenants understand the implications of this type of arrangement and are aware of the pitfalls.
The bottom line is no matter how much you trust the landlord, or 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 (what space is available, rental rates for comparable space, etc.) Unfortunately, it could take you countless hours, if not weeks to accumulate this type of information, and you will still leave money on the table by not being familiar with the nuances of lease negotiation.
Let an Expert Help You
Tenants have recourse – they can employ the professional services of a commercial realtor who specializes in tenant representative. In looking to hire a commercial brokerage firm, be sure to find a company that focuses on tenant representation and has little or no representation of building owners. Your tenant rep broker should also have a deep knowledge of the market where you would like to find office space. Visit our website for more information. www.thenesbittgroup.com