Assembling a good team is one of the most important steps optimizing your corporate real estate portfolio. In fact, it may be the most important step as your team is the foundation for sustainably improving the health of your portfolio. And something that every quality CRE team needs is a good broker. But what exactly is a “good broker?” The answer is different for everybody, although there are several traits that every team should seek in a broker – diligent, honest, experienced, etc. Today and Friday we will discuss some of those traits that you as the corporate tenant should avoid in your search for a new broker.
Tenant Rep Brokers
First things first, you want to make sure your broker specializes in tenant representation. Conflicting interests cost companies millions of dollars every day. Don’t fall victim to such a situation. Perhaps it is unclear where we might find conflicts of interests in recruiting brokers, so let’s take a quick look at where it may cost you. Most CRE brokers will take anything and everything they can get their hands on (especially in this economy). That means they are more than happy to represent both properties (landlords) and tenants. The problem here is that there is a great incentive to pair their tenant clients with their landlord clients to double-up on commission. These brokers have no interest in your best interests… period.
It is also important to remember that just because a broker specializes in tenant representation does not mean that their firm does as well. With this in mind, that broker (let’s call him Broker A) may have his clients’ best interests in mind, but those best interests still may not hold priority over the interests of Broker A’s colleagues. So let’s say down the hall from Broker A is Broker B, who only represents Buildings, and she just so happens to have a great building available that would be such a great fit for Tenant C’s CRE needs. The problem – as with any “great fit” – is Broker B’s building costs $5 more PSF than any other comparable building in the market. Would you think for one second that Broker A is going to employ the proper benchmarking techniques to see to it that Tenant C’s CRE needs are being addressed? Didn’t think so. Between Broker A’s Aptitude for massaging client expectations and Broker B’s Building she’s been trying to lease over the past year, Tenant C’s Cash is being flushed right down the Drain.
Make sure that when you are hiring a tenant rep, you hire a tenant rep and only a tenant rep. Here are a couple great resources to find a good national tenant rep or one in your area:
- Certified Commercial Investment Member (CCIM) Institute
- Society of Industrial and Office Realtors (SIOR)
- iOptimize Realty
Check back in on Friday for Part 2 of What to Avoid When Hiring a Corporate Real Estate Broker. In the mean time, take a look at some of our other great articles on our Real Estate Optimization Blog.
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