We’ve been following a discussion on a commercial real estate group on LinkedIn.
Recently, someone started a discussion which read:
The Tenant’s Advocate – we represent tenants only with negotiating commercial office leases only. Our fees are paid the by the landlord, not the tenant.
A few comments ensued, mostly around the follow-up question from a group member who replied:
I was really interested in your comment. How do you work for the tenant, but get paid by the landlord without having a conflict of interest?
We thought it would be helpful to share our response. We hope it shines some light on the vital role a tenant representative plays in the office leasing arena.
I totally agree with your post. I have been a tenant rep/buyers agent for over 26 years and my motivation is to obtain the best outcome for my client. In addition, a “true real estate professional” is negotiating much more than rate per square foot. The long-term office lease represents one of the most complex relationships in modern commerce. It spins an intricate web of mutual obligations between tenant and landlord, which can endure up to a quarter century or even longer. It survives a succession of real estate and business cycles, employees and other relationships. For the corporate or institutional tenant, the lease is often its largest single financial commitment. For the landlord, it may determine the property’s long-run financial viability. Entering into such a commitment demands technical expertise of the highest caliber. In the current real estate climate – where the non-rent variable has emerged as the most significant factor in leasing economics – demonstrated effectiveness is required. A tenant must consider an almost endless list of variables, such as negotiating tax and operating expense escalations, work letters, electrical charges, sublease and assignment rights, alterations, and options to expand or renew.
Have you used a tenant representative/buyer agency in a transaction? What were your experiences?