What is a commercial tenant representative?
A l tenant representative is a commercial real estate expert who works exclusively on the tenant’s behalf. This is very different from traditional real estate brokers who represent both the tenant and the landlord (which can create a strong conflict of interest). Your commercial tenant rep works in your best interest to secure the real estate deal that’s best for your company’s operational needs.
But before you hire any tenant representation specialist in Denver from an internet search, or think about hiring your brother-in-law’s bowling buddy, remember to ensure they have a long-standing history of success and client satisfaction. When it comes to commercial real estate, experience is invaluable.
Benefits of commercial tenant representation
There are many benefits of working with a commercial real estate representative depending on what your unique needs are. Generally speaking, a commercial tenant representative will help you:
1. Find the right fit
Commercial tenant reps will help you find the right fit in two ways. First, they’ll help you accurately define your facility’s operational needs—which might differ from what you initially thought. There’s no need to settle for ‘good enough’ when the solution to your needs can be tailored with the proper guidance. Armed with information, your tenant representative will then scour the currently available lease options and identify potential spaces that meet your needs, saving you the effort of searching the web or driving through commercial property submarkets hour-after-hour, day-after-day.
2. Access properties that aren’t listed on the MLS
Commercial real estate is very different from residential real estate. When you’re looking for new homes, it’s relatively easy to see all the properties that are for sale or lease via the multiple listing service (MLS). Commercial spaces, on the other hand, are often filled before it’s even necessary to list or advertise them publicly. Tenant reps have insider knowledge of the market and they can leverage their networks to ensure you can see all available spaces for your needs. In addition, the best commercial-only real estate databases are quite expensive subscriptions but a quality commercial tenant rep will have the access and information you’ll need.
3. Save time
Let’s face facts: finding the right office space is extremely time-consuming. Just consider all of the steps you’d have to go through if you did it all on your own.
- Determine how to translate your business’ operational needs into a physical space that is going to serve you for years to come.
- Educate yourself sufficiently re: current commercial real estate market rental rates; NNN rates; rental abatement concessions; tenant improvement allowances; construction costs; relocation allowances; new development opportunities; reputation of individual landlords, reputation of individual leasing agents; parking options & rates; base year; tenants that occupy the market, and off-market options.
- Determine which spaces match your operational needs.
- Coordinate with landlord’s leasing agents to set up property tours.
- Submit requests for proposals (RFPs) to all the landlords whose buildings fit your criteria, negotiate all economic deal terms with landlord’s leasing agent.
- Determine construction costs & suitable tenant improvement allowances.
- Narrow down which proposals to move forward with and ultimately have a lease drafted.
- Negotiate commercial lease provisions, such as a renewal option, an expansion option, a termination option, a right-of-first-refusal, holdover costs, assignment & subletting, commercial insurance, operating expense caps, operating expense exclusions, personal guaranty; letter of credit; security deposit; relocation rights; late-payment penalty; events of default, etc., all on your own.
- Coordinate necessary tenant improvement work with commercial architect for Construction Drawings (CDs), commercial general contractor, etc.
- Coordinate various vendors such as; moving; low-voltage cabling; security; A/V, etc.
If that sounds like a full-time job, it’s because it is. Seeking commercial tenant representation allows you to continue working on the day-to-day operations of your business so your productivity & your profits don’t decline.
4. Save money
Not only does a commercial tenant rep save you time, but they can also save you substantial money. A business’ occupancy costs (e.g. base rent, NNN rent, mortgage, utilities, parking) are typically the 2nd or 3rd largest annual expense on the P&L. They know the markets inside and out and know what a reasonable market price is for renting in any given submarket or any given product type (office, flex, industrial, medical office, etc.). With a quality tenant rep acting as a fiduciary, you don’t have to worry about being taken advantage of. You’ll always know that you’re getting the best overall deal terms possible.
5. Have more negotiating power
When the market conditions allow for it, quality tenant reps will not just negotiate with one landlord. By identifying at least three viable lease options, the tenant is never a ‘captive audience’ to a single landlord. This tends to create a situation where landlords are aggressively negotiating to win the tenant’s business resulting in a better financial outcome. Many tenants don’t know how flexible commercial leases can actually be. A commercial tenant rep can leverage their negotiating skills to ensure the lease terms are best suited to your business’ needs. This can save you thousands, if not millions, of dollars in the long run.
Leverage effective commercial tenant representation in Denver
We hope this article helped you see the value of working with a tenant representative. If you’re interested in finding commercial tenant representation in Denver, reach out to us at Fountainhead Commercial.
We’re here to help ensure your smooth transition to a new lease space or the successful negotiation to expand or renew your current commercial real estate lease. Contact us today to set up a consultation call with our commercial tenant reps.