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Another One Bites the Dust

The Houston Chronicle reported on Friday that yet another tenant-rep-only firm has sold to a full-service firm. Jackson & Cooksey has been a commercial real estate firm solely focused on representing users (tenants & buyers) of commercial real estate since 1982. They have agreed to be purchased by Newmark Grubb Knight Frank (NGKF) with a full-service firm which has gobbled up many firms over the last several years.

Why should you care? It’s just another step in the consolidation of the commercial real estate industry. Bigger-is-better seems to be the belief. The problem is that these giant conglomerations (CBRE, Cushman & Wakefield, Colliers, JLL, Transwestern, NGKF) try to represent all sides of a transactions.

Many of them have entities which own buildings, others that finance the purchase, another that manages the buildings, another to lease the building, another to appraise the building, another to sell the building…AND yet another to represent the tenants that lease in those buildings.

Does this sound reasonable?

Law firms know that the same firm can’t represent both sides to a transaction. So what’s different about commercial real estate firms? How can they do it?

The giants will tell you that they have walls internally that protect clients and won’t allow the different divisions to share information. But I can tell you from personal experience, that’s not always true. When I was an asset manager for a large property owner, some of these giants made proposals to me to lease my buildings and offered to put a tenant rep on the team. One of those giants, was a competitor in raising capital from college endowment funds, and yet their leasing division was pitching me to lease my buildings and were offended when I suggested that might create a conflict of interest!

Bottom line: giant companies look like a good solution to giant clients because they have a single point of contact. But the more everything goes to one party, the more risk that creates and the less trust you can have that your interests are truly being protected.

If you lease or buy buildings for your company or non-profit to occupy, use an advisor that ONLY represents the user. If they represent any landlords or own any buildings, do not consider them any further.

REATA is a member of the Alliance of Tenant Representatives. To be a member of this international group of commercial real estate companies, each member must pledge to never represent landlords.

Bob Gibbons is a Real Estate Advisor & Tenant Advocate (also known as a tenant rep) with REATA Commercial Realty, Inc. which is a tenant advisory firm based in Plano, Texas. Bob serves companies in Plano, Frisco, McKinney, Allen, Richardson, Addison, Dallas and the surrounding areas and specializes in companies which lease or buy office and warehouse properties.

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