When you sit down to choose a commercial real estate broker to serve as your tenant representative, finding the right one can be a challenge. Typically, the right broker brings two things to the table -- a personality that meshes with yours and a comprehensive skill set. While you can gauge whether or not a broker is a good fit for you through a conversation over lunch, asking the right questions is key to assessing skills. Here are six good ones and some guidance on what to seek.
1. How many tenants like me have you represented?
The right commercial real estate broker is one that has worked with tenants like you. If you are a smaller business, going to a broker that focuses on Fortune 500 tenants might not be a good fit. Furthermore, while more experience is usually desirable, don't pass up the opportunity to work wit ha great broker with 10 years of experience for a mediocre one with 40 years in the field.
2. How will you handle assignments outside of your local area?
Unless you are absolutely sure that your business will never expand out of your immediate area, it's always good to work with a broker that has an extensive network of colleagues across the country or the world. One way to do this is to work with a broker that is part of a large firm. However, if that broker is not well connected, he might not be able to find you the best practitioners in each area. Instead, look for a broker that has extensive personal relationships, regardless of the size of his firm.
3. What other options are there?
When your tenant representative shows you a space, you should always find out what else is available. It is his or her job to comb the commercial real estate market to find every suitable space. The best tenant reps will also help you to expand your definition of what is suitable to potentially find options that you might have not every thought to consider.
4. Should I lease or buy?
Experienced commercial real estate brokers know that the right answer to this question is usually to start asking more questions. Both options can be appropriate, and your tenant representative should be flexible enough to help you choose the right type of occupancy for each of your locations.
5. How will you help me compare different offers?
Spaces get priced with multiple variables, making it hard to compare different options. Your commercial real estate broker should be able to give you comparative matrices to help you compare to an apples-to-apples basis with a high degree of granularity. He should also be able to speak your CFO's language and use financial metrics like NPVs to compare the total costs of leases.
6. What else should I be asking?
Finally, to be an effective tenant representative, your broker should both ask you questions and encourage you to ask more questions. Commercial real estate transactions are complicated and the decisions you make vis-a-vis your portfolio can have long-lasting impacts on your business. The more both of you know up front, the better your decisions will be.
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