A few weeks ago, we discussed 7 questions you should ask before hiring a broker. That was episode 45. Today, on episode 49, we’ll discuss 8 more questions that you should ask before hiring a tenant rep broker.
- What is the current state of the market and in what direction is it headed? Oh, wow, need a crystal ball for this one! Definitely seeing landlords get a bit more reasonable. Not always in quoted base rent but definitely with free rent, tenant improvements allowances, etc.
- Is it better to extend my lease, in the same building , or move? This would have to be based on a case by case basis, but we are seeing landlords getting aggressive in bids for acquiring new tenants. Have your broker do a cost analysis of all options.
- What should I expect for free rent and tenant improvements allowance? Depending on the size of the lease (square footage) and term of the lease (length) you can do fairly well right now. Again, case by case basis and I would ask for the moon.
- How long a lease should I sign? Well, that’s truly the $64,000 question! Most tenants are coveting flexibility but that comes with a price. Upper management of the tenants company should evaluate their needs and have their broker do a cost analysis showing different term lengths.
- Should I buy instead of lease? How do I evaluate both options? Again, depends on clients needs but normally, buying is cheaper, long term, than leasing. REATA has a wonderful tool for analyzing properties side by side with buy versus lease.
- How early should I start the renewal/relocation process? How long should it take to get moved into a new building? Again, this depends on size and scope. If the client knows they are renewing in place with no improvements, they won’t need as much time. It they truly want to move, we recommend at least 12 months prior to renewal.
- What happens if I break the lease? Well, we are finding out about that now, quite a bit. Some folks are just walking their lease since they can’t return to work and their revenue stream has all but dried up (think primarily retail, restaurants, etc.). Depending on how iron clad your lease is, the landlord can rough you up pretty badly.
- What should I do to get prepared before starting this process? Actually, REATA has some paperwork we can send out that will help a tenant get clear on what it is they really want in their office/warehouse space, etc.
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.