If you’re in the market for commercial real estate, you’ve probably heard of the term “tenant representation”. But what is a tenant representative, and how can one help you? Does it cost anything to have a tenant representative working for you to help you find your ideal real estate? We’ll explore all of these questions and more in this post!
What is Tenant Representation?
Tenant representation is the representation of a tenant by a commercial real estate realtor. In other words, a tenant representative works on the tenant’s behalf, rather than the landlord’s behalf. For a tenant who is searching for commercial space, using a tenant representative is the best way to ensure that you have an expert who’s working with your best interest in mind.
A tenant representative will help you find the ideal property for your needs, serve as a middleman between the tenant and landlord, and take over the negotiation process to help you get the best possible deal. An experienced tenant rep will have extensive market knowledge in terms of both the real estate industry and the local area, putting you in the best position for finding the right space and the best deal for your needs.
What is a Tenant Rep Broker?
A tenant rep broker and a tenant representative are interchangeable terms. A tenant rep broker, or tenant representative, provides tenant representation services in the commercial real estate market. This service allows tenants to maximize their opportunities for finding the most fitting available spaces for commercial property. With an expert tenant rep broker on your side, as a tenant, you can make an informed decision for your business’s unique needs.
How is a Tenant Rep Different from a Landlord Rep?
Unlike a tenant rep, who represents the tenant, a landlord representative is a real estate agent who works on behalf of the landlord. A landlord representative’s goal is to maximize profits for the landlord, while also decreasing potential risk. This type of representative takes care of a variety of tasks for property owners, such as market analysis, attracting tenants, maintaining responsible tenants, handling lease renewal and lease negotiations, and overall overseeing real estate transactions on a landlord’s behalf.
Landlord reps are incredibly valuable if you’re looking to find prospective tenants for your commercial properties and ensure the most favorable lease terms in order to maximize your profits. However, if you’re a tenant looking for the ideal space for you, keep in mind that a landlord rep is looking out for their client’s needs. While a landlord rep can be helpful to tenants, their job is to ensure the most favorable terms possible for the landlord.
As a tenant, it’s in your best interest to work with a tenant rep – someone who’s in the game to prioritize the tenant’s interests.
What Does it Cost to Have a Tenant Rep?
So now that you know how beneficial it is to have a commercial real estate expert working exclusively on your behalf (rather than on the landlord’s behalf), you’re probably wondering what it costs to have a tenant rep. The answer is that it doesn’t cost you anything extra to have a tenant rep working to find the best solution for your needs.
Well, when commercial real estate brokers earn commission, it comes from the landlord or seller of the property. These commissions are already built-in, meaning that you don’t have to pay anything out of your pocket. If you don’t use a tenant representative, the whole commission will go to the landlord’s broker. In other words, it really doesn’t affect you either way. As a tenant, your best option is to have an expert tenant rep in your court – someone who will help you make the right decision for your needs with your best interest in mind.
(Want more info? Find out more about how commercial real estate brokers get paid.)
Benefits of Having a Tenant Representative
More than just having someone who has your best interest in mind as a tenant, what are some of the more specific benefits of having a tenant representative?
1. Saves you time
One of the main reasons that people hire a tenant rep is to save time! An experienced tenant rep is well-versed on current market conditions, comps, and in negotiating a fair deal. These are all areas that you could study for yourself, of course. And while it sure doesn’t hurt to learn about these subjects, it won’t compare to the years of experience that a professional real estate broker already has.
Tenant reps use their current and past experience to ensure that you’re getting the best deal possible, keep an eye out for any potential landlord issues, and get you through the negotiation process more quickly and smoothly.
2. Local expertise
As you search for the optimal real estate solution for your commercial space, a tenant rep who is a local expert can give you the inside scoop on finding the best location for your needs. For business owners looking for office space or a storefront, having this local knowledge can be absolutely invaluable. This is especially important for tenants who may be moving from a different area.
Even if you’re local to the area, however, a tenant rep (sometimes called a tenant advisor – for good reason!) will help you define what’s most important for you in regards to finding the perfect space for your business needs. Then, they can use their local market knowledge to hone in on the most ideal property in a good location to best support your business.
3. Expert negotiation
Remember that for a tenant rep, the needs of a tenant are paramount. Because their goal is to find the best new space for you, rather than to sell, rent, or lease a specific piece of property, they’re objective in regards to finding the best site to meet your business goals.
However, finding the right space is just the first part of the process. After you’ve chosen the right real estate for you, a tenant rep will help you negotiate the lease agreements. This can include areas such as the length of your new lease, tenant improvement options, lease renewal opportunities, and more.
4. No extra fees
As we discussed above, in most cases, getting all of these benefits requires no extra fees on your part. Tenant reps are paid by the landlord and usually don’t charge any fees to the tenant. Your tenant rep will receive their commission from the landlord after your lease is signed.
So, while you could research market conditions, study to negotiate the best terms for yourself, dig into the financial analysis details, and study the local area, the bottom line is that in most cases, it won’t save you any money.
5. Access to more properties
Working with a commercial real estate broker gives you better access to all of the potential locations to look at. Because of the tools and databases that brokers can access, they may be able to find properties that aren’t yet listed to the public. In many cases, they can also see more information than you can find on your own.
6. Easier communication with the leasing rep
Lastly, tenant reps who are known in the industry may already have a relationship with the landlord rep who’s representing the properties you’re interested in. This makes communication easier and gives you a better chance of getting ahold of the leasing rep while the property is still available. Leasing reps also recognize the reputation and authority of local tenant reps, which keeps them honest and helps you avoid getting taken advantage of.
In summary, tenant rep brokers bring a level of authority and knowledge to the table that’s vital for being prepared for honest and efficient negotiation with a landlord or landlord rep.
How to Choose the Right Tenant Rep Broker for Your Needs
There are numerous benefits of having an experienced tenant rep on your side. But when it comes to choosing someone, how do you go about finding the right fit for you?
1. Find someone with experience
Experience is one of the most important factors in commercial tenant representation. Experience is what allows a representative to have good relationships in the industry, negotiate well, understand your space needs, and more. However, keep in mind that it’s not just the years of experience that matters, but also how many deals they’ve closed within their time as a tenant rep.
2. Listen to what other tenants have to say
A high-quality tenant rep should have the backing of past clients. Listening to what past clients have to say is one of the best ways to know if a tenant rep will do a great job for you. Checking website reviews can be helpful, but do keep in mind that these are usually hand-picked by the representative and may not be an honest representation of what it looks like to work with a specific real estate specialist. Google reviews are a great place to do some reading of unbiased opinions from past clients.
3. Find someone who’s organized
Look for someone who’s organized and understands the full process of leasing, renting, or purchasing real estate. Your tenant rep should be able to clearly walk you through the steps of finding, negotiating, and closing the deal on your property.
4. Choose a rep who cares about your needs
Lastly, no matter how much experience a real estate professional has, it’s important to find someone who connects with you and truly cares about your needs. When you first talk with a potential rep, they should be able to take the time to listen and learn about your interests and what’s important to you in a property. Then, they can truly help you as you hone in on finding the ideal space for you.
Want to know more? Check out these additional tips for hiring a tenant rep broker.
Contact Regent Commercial Real Estate for Tenant Representation Expertise
At Regent Commercial Real Estate, we’re passionate about finding you the ideal property for your needs. To us, understanding your goals in order to help you secure the best location for you is our top priority.
With experience negotiating nearly 1,000 leases and sales in North Carolina and South Carolina, we’re here to use our experience and expertise to help you find your next location successfully. Find out more about our real estate services, or contact us today!