If you want something done right, you’ve got to do it yourself. Well, that would be great if you didn’t already have a million things to worry about. 

Whether you’re the Director of Corporate Real Estate (CRE) or CRE is one of many hats you wear, managing your company’s Corporate Real Estate (CRE) is a full-time job (and not an easy one). But luckily, you’re not alone. You want someone who knows what they’re doing. So, what’s the next best option if it can’t be you? 

Offset your burden by teaming up with a Tenant Rep. A pure Tenant Rep, who solely represents you, the corporate tenant, and not someone whose company also represents landlords.   

Tenant Reps are equipped with critical market knowledge that will not only take the CRE weight off your shoulders, but will also direct you to the best properties, terms, and savings. They empower you to stay on top of your CRE, even when many responsibilities require your attention. 

Why Market Intelligence is so Important 

Finding the Right Location 

Getting the Right Lease Terms

Leveling the CRE Playing Field 

Why is Market Knowledge so Important? 

If you don’t know what the market is offering and the prices of similar properties, you don’t know if you are getting a deal. Your current space was the best option for you when you signed your lease- is it still? There may be new properties that didn’t even exist before that may better suit your current needs. The market is inundated with viable properties as the national office vacancy rate hovers around 14.8%, and as a result- your tenancy is more valuable than ever.  

Essentially you don’t know what you don’t know =. If you are unfamiliar with the current market and going rates for buildings like yours, you have no footing to assert your claim for renegotiation.  

To get the best deal on a new or renegotiated lease, familiarize yourself with: 

• Rent per square for buildings in your target area 
• The amount of free rent being offered 
• The amount of Tenant Improvement Allowances (a/k/a work letters) being offered 
• The vacancy rate –which  is critical to knowing how much landlords need you 
• Other terms and concessions being offered to tenants  
• Subleases in the area that depress local rent 
• And many other factors that your Tenant Rep, such as landlord reliability 

You can’t begin the process of finding a new space or, just as importantly, negotiating a renewal with your current location – without it. 

Knowing how the demand fluctuates in your area will allow you to pounce when rates are low. Any tenant who has been in a lease for several years can take advantage of dips in demand.  

If you’ve been in your current space for a while, your rent has no doubt escalated.  Depending on these variables, you will either be over or under-market:  

• The type of rent escalation 
• How long you have been in the space 
• Macro-economic factors (are we in a recession or growth phase) 
• Micro-economic factors (is this city losing or gaining tenants) 
• Market supply vs demand (vacancy rate)
• Black Swan events (pandemics, war, stock market crashes) 
• Inflation and CPI rate 

More times than not, tenants find that their rent is over-market when compared to current market conditions.  That is because their rents keep no matter if the market is not. 

If you are a tenant that the landlord strongly desires, there is a good to great chance that you can renegotiate your rent and terms to market rent and terms long before the lease end.  There are, of course, many factors that go into this. Here are just a few: 

1. The creditworthiness of your company 
2. Are you a prestigious name brand company 
3. How much space are you currently leasing 
4. How much space do you need, ie, if you are growing, the landlord is much more likely to work with you than if you are shrinking. 
5. The landlord’s vacancy in this building and in their overall portfolio 
6. How much time is left on your lease
7. How much work do you need (Tenant Improvement Allowance) 
8. The landlord’s financial strength – do they really need your deal? 

Each situation is different.  We can go on and on with possible factors, but the point is: it is a complex equation that is dependent on many factors, most of which are in a state of flux.  As proficient a  negotiator as you may be, going it alone, or using a landlord broker, is guaranteed to leave money on the table.  And, the landlord will love you for it. 

Finding the Right Location 

If you’re looking to relocate or open a new office, you literally have the whole country at your fingertips. This sort of situation can definitely bring on choice paralysis, especially when so many business-friendly states are emerging as hot spots for corporate relocation. 
 

Having the right market knowledge will allow you to find the spots that are not only the most affordable- but the right location for your company. This means cultural considerations, terms or concessions are typically offered, potential economic incentive offers,  where the talent pools are concentrated for your type of operation, and many other factors. 

Having unbiased market intelligence, not just on the local market but perhaps alternative markets, can open your horizons to better, money-saving options. For example, let’s say you’re looking to open an office in Manhattan where rent is $91 psf. Did you know that you could find that same class A office space for a fraction of the price? 
 

Also, when fully leveraging market knowledge, it considers the quality-of-life concerns and modern layouts for offices so you can create corporate environments your employees will want to go to. Thus, making you a more competitive recruiting force in the war for talent.  

Getting the Right Lease Terms   

Corporate leases are often 80+ pages, and Tenant Reps know from working with landlords daily that there is a lot of room for landlords to pull the wool over your eyes in a document of that length.   

If you are not appropriately prepared, there is a lot of room for you to lose money. This potential is doubled when you consider reading between the lines of those 80+ pages for what is not there.   

The biggest pitfall uninformed tenants fall into when trying to negotiate on their own is only reading the terms the landlord includes, without even considering specific terms or clauses that may have been left out.  

You may think all of the appropriate clauses are outlined in the lease, but you could be missing out on certain critical rights you hadn’t even supposed to look for. There are many terms to be aware of within your commercial leases. This includes nuances and clauses you may not have considered, including parking rights, signage, expansion rights, sublease clauses, renewal options, etc.  

Your Tenant Rep will check for any “gotchas” included (or skillfully omitted) from the lease and then work with your attorney to make sure you are protected in subsequent lease drafts.  

Level the CRE Playing Field 

Nothing makes the landlords’ day more than when you come to them unrepresented by your own Tenant Rep broker.  They know they then have home field advantage because these landlords are in that local market, 24/7/365.  Maybe you are renewing a lease there every five or so years.  Or maybe, this is your company’s first time in that city. 

Or, better yet, when you come represented by a company that also represents them in this or one of their other properties.  Perhaps that brokerage firm doesn’t have an exclusive with the landlord (yet) but covets having one in the future.  How hard do you really think they will press that landlord for a great deal for your company? 

Obviously, you want your own expert representation.  Someone whose resources, market intelligence, experience, and most importantly, allegiance are for you.  Keep in mind CRE is typically a company’s 2nd biggest expense.  
 

iOptimize Realty® has 30+ years of experience solely representing corporate tenants and purchasers of CRE.  We have the systems, technologies and know-how that typically save our clients 30% of their cost of occupancy  and 90% of their personal time.  Schedule an appointment to learn more.