July 21, 2011
You see a glistening glass office building and decide this is a perfect space for locating your company. The place is close to expressways with ample parking and attractive. How do you make it happen?
You - like many clients - have a variety of ways to reach out for someone to lease this property. Some look in the Yellow Pages, others study listings in the back of regional magazines and some look for a name and telephone number on the side of the building they want to inspect. First you want to find someone to represent you and it may not be the name on the property.
In the real estate business an agent may be referred to as a Realtor if he belongs to the National Association of Realtors, this is a trade marked term as opposed to a real estate agent who may be trained by an agency. A broker must have worked in the industry and completed a number of transactions and passed tests before getting their designation.
Within the realm of buildings, you’ll find brokers and agents representing residential, office, industrial, retail, land and investment. These categories break down into tenant representation and listing agents. Hire an agent who specializes in the kind of property you seek.
If your firm wants to renew its existing lease or relocate, you are best served with someone who specializes in tenant representation. This individual works only for your firm. Never hire the agent whose name is on the building. They work exclusivively for the landlord. Another thing most people don’t realize is that if a building is represented by a commercial agency, every agent in that office has a fiduciary relationship to that landlord. Check websites to see if an office has a lot of listings which will tell you it is most likely a firm that represents primarily landlords. Do not hire the agent who tries to work for both tenants and landlords. Otherwise your firm could be used to help that agent get a listing. In the end you will not get the best deal because that agent needs to keep the landlord happy if he ever hopes of getting a shot at the listing.
Sometimes I run into people who want to negotiate their leases themselves. One nonprofit I called on for years kept negotiating the lease themselves. They didn’t see any reason to bring in a third party. It just so happened I was working on a large acquisition in their building and we were able to get a list from the landlords of all the rents. That nonprofit was paying $8 per square foot higher than the other tenants in the building. They did not have access to what the actual deals were doing in the market so they had no basis when negotiating. You want to hire the right agent to do the job. If you have an office building for sale or lease, don’t go to a firm that works primarily in the retail or residential. They will know all the buzz terms, however they won’t be able to provide as good of service. When listing a property for lease or sale it is beneficial to find a team. The agent should list your property in the following databases: Co-star, CPIX, Loop-net and the Michigan Site Net.
If you are hiring a broker to list real estate for sale or lease ask the broker what type of advertising will the agent do on the property? The larger the property the higher your expectations. The following are a few examples of marketing: brochures, post cards, newspaper or industry specific advertising.
Cold calls are not anyone’s favorite thing to do, but they can bring in good results. Find out if cold calls will be made for the listing. The agent should be able to tell you whom they are targeting for perspective tenants. They should also provide monthly updates.
Questions are vital in the initial interview. Following up on references before hiring a Realtor can save you lots of headache and money. The most important thing to remember is to hire someone who specializes in the type of transaction your firm needs completed for the best results.
Lynn Drake is president of Compass Commercial, a Troy, Mich., -based company specializing in all phases of tenant representation for local and national clients. With 20-plus years of leasing experience she helps entrepreneurs and executives identify the right space at the right cost. This is the second of a three-part series on understanding real estate. Reach her at www.compass-commercial.com.