People sometimes ask us if hiring a tenant representation broker is really necessary, especially when they’ve already selected the building where they wish to lease space. They’ve already spoken to the leasing agent and even seen their ideal space.
Let me ask you a question: if your spouse sued you for divorce, would you agree to use the same attorney? Sharing the same attorney to save money sounds crazy, right?
That’s basically what you would be doing by not hiring a tenant rep broker. Are the transactions the same? Of course not, but if you rely on the landlord’s leasing agent, it’s actually worse. Because that leasing agent has a fiduciary responsibility to the landlord – to get the best deal possible for the landlord. Not having your own representation leaves you vulnerable to the landlord who knows the commercial leasing business oh so well, and their building, even better.
Entering into a multi-year lease without an expert negotiating the deal and reviewing the lease document on your behalf is dangerous. The cost of representation is already included in the rental rate, so there is no reason to go it alone.
We’ve never seen a case where the total cost of leasing was cheaper by not using a tenant rep broker. In fact, tenants without representation usually pay more. When I was a landlord, I found that an unrepresented tenant would result in a 10-20% better deal to the landlord.
The landlord may tell you they are giving you a break on rent since you’re not using a tenant rep broker and the landlord is saving the commission, but I’ve never seen that to be true. We had a client one time who showed me a proposal from her landlord which said they would pay her the commission they would normally pay a tenant rep. But the rental rate was $24.50. She engaged us and we got her a $21.30 rate in a better building and the landlord was still happy to pay the commission.
Other areas which need to be negotiated are building operating expenses, parking, common area maintenance, tenant improvements and options. There are so many expenses baked into a commercial lease that an expert is needed to insure you, the tenant, get the best deal.
Are we biased? You bet your sweet bippy we are! We exclusively represent users – whether when leasing or buying office and warehouse properties. This is our value add and we love handing it out freely to all who ask.
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 that lease or buy office and warehouse properties.