Tenant representation is exactly what it sounds like. It is a type of commercial real estate brokerage where an agent focuses solely on the needs of a tenant, rather than being tied to the lessor or landlord. Tenant reps are the leasing industry's equivalent to a buyer's broker on the sale side of the industry. While the underlying principles might seem straightforward, the benefits of working with a CRE expert that is tied to you run deep.
The WHOLE Truth
When an agent works for a landlord, he or she has an obligation to show you one potential property -- the one that he or she is representing. Whether that site is a good one for you or a bad one and whether it's a bad deal or an attractive one, that agent is bound to represent his client's interests by selling you on the site. He might be nice to you. He might seem helpful. And he might even seem like he's telling you the whole truth by highlighting certain issues with the site he represents. But he isn't telling you the whole truth.
The whole truth gets discovered when you look at a potential location in conjunction with other locations. Even if you know everything good and bad about a site, you don't necessarily know how it compares with other potential locations. Part of a tenant representation broker's job is to find multiple sites for you and help you compare them. That way, you get the truth about the market as a whole so that you can not just choose a good location, but choose the best one relative to the others.
Whose Side Are You On?
Your tenant representation specialist has only one party's interest in mind -- yours. Since they work for you, they are charged to aggressively respect your interests in the negotiating process. They keep your confidences and push for terms that meet your needs, instead of the landlords.
Working with a landlord rep, on the other hand, puts you in a weaker position. While they owe you a basic standard of good care in many states, at the end of the day, the landlord is signing their checks. As such, their loyalty is already resting with the other side.
A Cost Benefit Analysis
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.
However, working with a tenant rep is almost always free for you. Their commission gets paid by the landlord or the landlord's broker. If you weren't working with a tenant rep, the other broker would just get both sides of the fee. As such, the cost benefit analysis is almost always a no-brainer. Tenant representation wins.
Here are a few other articles to check out: