Why Tenant/Buyer Representation is a Smart Idea

by Bill Trinen, Trinen Realty Partners

After labor costs, Real Estate is typically the next most expensive line item on the balance sheet. Engaging an experienced Commercial Real Estate Broker to represent your best interests is critical to the transaction process and will save you time and money.

LABOR COST

Corp_main_image Finding a property/space can be a time consuming process. A tenant/buyer broker guides the process and does the work for you making it more cost effective. This service is at no cost to the tenant/buyer, as in most cases our fee is paid by the landlord or seller. The Colorado Real Estate Commission stipulates that tenants and buyers have the right to representation from a licensed real estate commercial broker and to seek compensation from the landlord or seller.

LEASE RENEWALS

Engaging a commercial broker to represent your business in a lease renewal levels the playing field by having a legally appointed advocate to represent your best interest. Landlords and building owners usually have representatives that advocate their best interests leaving the tenant to fend for themselves. As the tenant advocate, the tenant rep broker identifies suitable space options and requests proposals from other building owners to move the tenant. This information can then be used as leverage or bargaining power to negotiate the best lease rate, tenant finish upgrades and options at the current location. The landlord will simply sharpen their pencil when the tenant has representation. In most cases the real estate fee is built into the asking price, and brokerage fees paid by landlords are generally a part of the landlord’s operating costs of doing business. The possibility a tenant might vacate the building altogether and move to a competing facility is a constant threat to property owners, yet an opportunity for tenants to lower their overhead and have the best lease terms and facility options.

RELOCATIONS

Hiring a commercial broker to represent you in a relocation is the same process as a lease renewal but with more focus on actually moving.

This process includes:

  • Finding and touring suitable space alternatives
  • Requesting proposals from building owner representatives
  • Financial analysis of space alternatives
  • Preparing counter offers to obtain the best possible terms
  • Working with a space planner or architect for space modifications and tenant finish work
  • Negotiating the lease document
  • Assisting tenant with vendors for phone, network cable installation, furniture, moving logistics
  • Tenant/buyer representation fees are paid by the landlord/owner on relocations.
NEGOTIATIONS

Property Agent Giving Keys To Owner Against New HouseHaving professional representation demonstrates a level of commitment and that you are aware of space alternatives in the marketplace. A tenant/buyer representative knows the market and economic conditions that could impact your business, and deals with landlords and tenants continually. Understanding the mechanics of a real estate transaction is critical in structuring the terms to work in favor of the
tenant/buyer.

FINANCIAL ANALYSIS

Reviewing various alternatives from a financial standpoint is critical.

Some of the analyses we can provide are:

  • Net Present Value to compare various leasing alternatives
  • Argus and Internal Rate of Return runs for investment scenarios
  • Lease vs. Buy Analysis
  • Build-to-Suit Pro-Forma
  • Design-Build Models

Comparing different options and making smart financial choices is critical
to managing the 2nd most expensive line item after labor cost . . .
the real estate.

DOCUMENTATION

Familiarity with the documentation and customary clause language used during the process is important.

A tenant/buyer representative has strong knowledge of the following
documents to navigate the process:

  • Offers and Counteroffers
  • Letters of Intent
  • Leases
  • Work Letters
  • Amendments
  • Purchase and Sale Agreements
  • Lease Guarantees

Click here to download our TENANT/BUYER brochure.

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