Commercial Tenant Representation, What is it?
Tenant representation is precisely what it sounds like. Entrepreneurs or business owners will hire a commercial real estate broker to represent them in the process of leasing work space.
A tenant rep only represents the tenant and negotiates on their behalf to achieve the best possible lease.
New business owners or current business owners looking to expand or relocate fail to understand the importance of a tenant rep because they’re not aware of the service. Plus, the property management company will never inform them to get representation. With a tenant representative in the picture, tenants can concentrate on the business of the day and worry less about getting an office space that suits their purpose.
Why Hire a Tenant Rep
The tenant rep has the corporate tenants’ best interest in mind throughout the leasing process. Plus, they can provide a tremendous amount of local market knowledge and resources that the business owner can leverage.
When you want to hire a tenant representative, opt for a firm and broker that represent tenants only, and has local knowledge in the area that you want to setup your business in.
You should look at a tenant rep as an extension of your internal staff. In the future they’ll provide the knowledge that is needed when your business wants to expand into other locations or migrate to a larger office space.
Tenant Representation Process
Whatever you do don’t call the sign in front of the building that you want to lease because they don’t represent your best interests. Those commercial agents represent the property owner and will negotiate against you when you want to sign a lease.
Work with a tenant rep that does commercial leases on a regular basis. Don’t work with a residential agent that lacks experience with commercial real estate. Their residential knowledge doesn’t carry over the commercial.
The tenant rep will build a list of available properties that meet your criteria. There’s no need to walk the properties until you’ve determined which properties work best with your business.
Narrow down the available properties and the rep will setup a time to walk the property and view the available space.
If it’s a great fit then the rep will build what’s called an LOI (letter of intent) on your behalf and submit it to the property management company.
You and your rep will negotiate mutliple items on the lease to create the best possible lease terms in that local market.
After the property management company accepts the terms they’ll submit the actual lease agreement with legal ease. At this point you might want to invovle a lawyer because the tenant rep is unable to provide legal guidance.
Pro tip – If you’ve never leased commercial property then you’ll need to have all of your business paperwork in order (P&L statements, tax returns…). If this is a brand new business then you’ll need to provide personal financials.
Types of Tenant Representation
Tenant Representation To Lease Retail Space – Parking, lease terms and concessions, location convenient to employees, ammenities, off market and on market, surrounding area, easily accessible to clients, frontage road marketing
Tenant Representation To Lease Office Space – parking, room to expand, ammenities, location, elevators or stairs, low or high ceilings, views, overall experience for your staff and clients
Tenant Representation To Lease Lite Industrial Space – loading dock or just a roll up door, AC, office, type of electricity, accessibility
Hire The Best Tenant Rep in Austin, TX
Jumping into the negotiation process without experience can be pretty daunting. A landlord can quote any number or terms, and you have no inkling whether they’re standard for the market unless you do an in-depth research beforehand.
Things like renewal options, tenant improvement allowances, and exclusivity use terms are just a few items for negotiation, and it can be hard to know how to negotiate these if you do not have experience in the real estate industry.
Between the knowledge, negotiating and service benefits, tenant representation can potentially save you thousands or millions of dollars over working with landlord representatives. Given the value that tenant reps add, you might expect to pay them a sizable service fee for what they do for you.