Choosing a commercial real estate broker/advisor to serve as your tenant representative can be a challenge. Asking the right questions can help determine whether or not a broker is a good fit for you. Here are six good ones and some guidance on what to look for.
1. Does your firm focus exclusively on tenant representation or do you also represent landlords?
If the answer is “we represent both” then there is an inherent conflict of interest. To insure that your best interest aligns with that of your advisor, choose a firm that focuses exclusively on representing tenants. This eliminates any potential conflict of interest that exist with “full service” commercial real estate firms.
2. Have you represented similar tenants?
The right commercial real estate broker/advisor 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 with a great broker with 10 years of experience for a mediocre one with 40 years in the field.
3. Do you have the ability to handle assignments outside of your local market 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 network. 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.
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 analyses to help you compare on an apples-to-apples basis with a high degree of detail. 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 an bottom line. The more both of you know up front, the better your decisions will be.
Understanding complex lease documents can be a challenging process. Working with an experienced commercial real estate advisor specializing in tenant representation can help to ensure that you have access to the right tools and knowledge to be able to calculate what exposure your company could have both in the near- and the long-term. Give us a call at 314-821-0085 or email doug@howardcommercial.net
