Your current commercial real estate could very well be a money pit. Yes- it’s as bad as it sounds.
As we enter a recession, your company will be looking to cut costs wherever possible to improve its bottom line. So, the spotlight may be on you if you’re in charge of your commercial real estate. Why? Commercial real estate is usually the second most expensive cost a corporation fronts. Any mistakes in your CRE are actively draining your company’s overall budget and possibly costing millions.
So what can you do? Take the burden off your shoulders and offload this responsibility to a Tenant Rep. As real estate experts who only represent tenants, they can literally save you 80% of your CRE costs.
We aren’t saying that you need a tenant rep to work with your portfolio, but by the time you finish this article, you’ll probably be wondering why you wouldn’t work with a Tenant Rep.
So in this financial crisis, when every deal is thoroughly analyzed, ensure your head is not on the chopping block. Learn why a tenant rep is an invaluable asset- in the recession and beyond. We’ll walk you through what a Tenant Rep provides, including:
Market Knowledge
How can you put a price on decades of experience? Well, we can.
Working with a true Tenant Rep can traditionally save corporate clients potentially up to 30% on their total cost of occupancy.
Knowledge is power. From working in CRE daily, Tenant Reps know the most efficient methods for researching and scouting the best properties. So not only will you get access to more properties, but these spaces will likely have better features and terms for a more reasonable price.
At the end of the day, you don't know what you don't know. And even sophisticated tenants only enter the CRE market when their lease expires (probably every five years or so.) Why would you want to put yourself up against landlord brokers thinking about deals 6/7 days a week?
Market knowledge and industry experience are critical to securing the best deal. Arm yourself with a partner who has seen it all.
Negotiation Prowess
Right now, your tenancy is the important thing to your landlord. Just as everyone is concerned with their bottom line, landlords are worried about losing your business (and they’re shaking in their boots at the potential of vacant space). Why? Let’s paint a picture.
Well, right off the bat, we’re likely entering a recession. This means they’re going to do everything they can to maintain their income. Second, inflation has reached an all-time high, causing the price of everyday goods and services to skyrocket.
As expenditures like gas become less affordable, so will the landlord’s operating expenses. They will be looking for someone to help offset these costs. That means, with the price of operating expenses steadily increasing, the price of vacant space is even more of a drain on their budget. Not only will they be losing money on the empty space, but they will be paying through the nose for upkeep.
But that’s not even the worst of it from the landlord’s perspective. With the emergence of remote work, we are dealing with an entirely different corporate environment.
Many landlords are looking at the future, anxious and uncertain about where they stand. Massive corporations are making headlines by slashing office space or closing offices entirely. These acts are sending shockwaves through the field of commercial real estate as they show other corporations that hybrid workforces are not only possible- but a preferred working environment.
Essentially, CRE demand has reached record lows… and landlords know this. But, you know who else is in on the secret?
Tenant Representatives.
Tenant Reps, like us, have been observing the changes to CRE. We have seen how hungry landlords are for credit-worthy tenants (and what they’re willing to offer to get them in their properties.) As such, skillful negotiation on your behalf is quite literally invaluable. And lucky for you, Tenant Reps are no rookies when it comes to negotiating with landlords.
Tenant Reps are thoroughly prepared with the ins and outs of CRE deals. But not only this, they know how to properly leverage the value of your tenancy in negotiation to secure the best terms, price, and overall deal.
There is no shortage of what can be achieved with the proper negotiation. You can lower your rent to market value, get more concessions like rent abatement or TI allowance, or cut your space. The point is, you have the power to introduce the terms that will work for you to your landlord.
Due-Diligence
So, you can assess the performance of your commercial real estate. For example, are you located in the most business-friendly region? Are your terms outdated or costing you money?
You can overhaul your CRE- with the help of your friendly neighborhood Tenant Rep, of course!
Deep diving into your portfolio will take a lot of leg work, but that’s what makes tenant reps such invaluable partners. In fact, their work and dedication can save you 90% of your time.
Due diligence ensures that your CRE is working for you- not the landlord. For instance, commercial leases are complex documents, often exceeding 80 pages. Not only that but they’re drafted by sophisticated landlord brokers and teams of attorneys. Do you know all the minute details that could include stealthy costs or questionable terms within those 80 pages? Tenant Reps do.
Your rep will undergo a comprehensive analysis of your portfolio.
|
They will identify areas of inefficiency, optimize your space utilization, and point you to all the best geographic options. |
They know where to look within your lease and what to do when things don’t align with your best interest.
Working with a rep will take the burden off you while removing any guesswork. Then, all you will have to do is bless the final terms.
Unconflicted Service
Right now, the importance of getting the best deal for your commercial real estate has never been more critical. Unfortunately, most traditional brokerage firms will promise you the world but can't deliver.
Conflicts of interest deprive you of the unbiased service that will find the best solutions for you. Many brokers belong to a chain of command that runs business for landlords.
Okay, now that we said it nicely, let’s say it clearly.
When your brokerage firm represents landlords, they have no fiduciary to you. In fact, they have a legal fiduciary to the landlord to get the highest price and best terms for them.
This means you will likely see fewer properties that don’t entirely align with your needs. They have an interest in matching open properties with a tenant (regardless of if they fit your preferences or not).
Even worse, you’ll probably be leaving money on the table in the property that doesn’t fully deliver what you were looking for. The clauses and terms may not be in your best interest, and the deal might be closed before anyone has a chance to even realize you’re getting hosed.
True Tenant Reps, on the other hand, only work for tenants. As such, you never have to question whether you’re getting the best deal because their fiduciary is only to you. You get the peace of mind as if you had your own best, trusted people on the job.
So before you sign a deal with the devil, make sure you’re working with a true Tenant Rep. It will make all the difference in your bottom line. Because down the line, you don't want it to be you when they’re looking for someone to blame for the real estate causing them millions.
The Cost of Working With a Tenant Rep
You probably think you’re sure to pay a premium for all of these features. You’re in for a pleasant surprise. Tenant Reps cost the corporate client nothing. Yes, nothing!
Their fee comes from the landlord’s budget. Therefore, not only will a tenant rep not cost you anything, but they will open the door for millions in savings.
Since we are entering a recession, smart real estate moves have never been more critical. Your CRE has the potential to make or break your bottom line (and put off talent cuts).
So, don't go at it alone or get complacent in a space actively losing money. Use a Tenant Rep for what they are here to do: analyze your portfolio to make improvements and find solutions.
Learn more steps to safeguard your CRE against the recession.
Ready to find your company's surrogate CRE department? Talk to a rep now!
Wondering where to begin?
Related Content
Subscribe to Our Learning Center
