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The Red Flags of an Unfavorable Commercial Real Estate Lease

Posted on September 9, 2019 by Mike Kushner in Blog, Commercial Real Estate, Tenant Representative/Buyer Agent No Comments

As a tenant needing commercial real estate space to run your business, it can be challenging to navigate the many twists and turns of finding the right space and entering into a favorable lease agreement. Your lease with your landlord can have a large impact on the success of your business, or it could cause many headaches. To ensure you’re entering into a fair and favorable agreement, let’s look at some of the most common red flags that can pop up in a commercial real estate lease.

Term of Lease – One of the most important pieces in a commercial real estate lease, short of the price, is the duration of the lease and how it’s structured. You want to be sure you fully understand when your lease begins and when it ends, especially when the landlord is making improvements to the space. A landlord may provide more favorable pricing or terms when entering into a lease that has a longer duration. While this is helpful from a budget perspective, be sure you feel confident that you will want to stay in this space for that amount of time.

Lease Renewal – Another possible red flag in a commercial real estate lease is when and how the lease will renew. When your current lease comes to an end, a landlord may desire the lease to auto-renew. As a tenant, you will want to be aware of this well in advance so that if you do not want to renew your lease you have options to exit the lease. Additionally, look to see if the lease specifies a change in price upon renewal. Sometimes there will be an increase that could hit you unexpectedly.

Lease Termination – Next, be sure you know the terms and penalties for breaking a lease. While it may not be your intentions to break the lease early, various factors impacting your need for the space could make it necessary. If the Lease imposes a steep monetary penalty for breaking the lease early, you may wish to negotiate that down to more favorable (and reasonable) terms.

Environmental Considerations – Some commercial real estate leases may specify that a tenant may not store any hazardous materials on the premises. This is not typically an issue; however, you will want to be sure that included in the lease is a warranty from the landlord that the premises are free of such hazardous materials. In a situation where you plan to use the commercial space (such as a warehouse) for storage of consumables (i.e., food and drinks), you may want assurance that your inventory is not likely to be contaminated.

Insurance – Be sure to check the required minimum coverages for a tenant’s liability insurance. Typical coverage minimums are $1 million per occurrence and $3 million in the aggregate. If the lease specifies higher minimums at a price that is concerning, you will want to make this part of your negotiations before signing the lease.

Maintenance – A commercial real estate lease should outline who is responsible for the repairs and maintenance of all building systems, including HVAC, electrical and plumbing. Should the lease place the responsibility on the tenant, you may wish to renegotiate this. In a situation where the tenant is only leasing a small percentage of the overall building space, it’s unusual for the tenant to assume the costs of repair and maintenance for things that impact more than their rented space.

Defaulting – Closely review the language in the lease regarding missed or delayed rent payments. It is reasonable to request at least one written notice during any 12-month period (to account for a reasonable mistake), as well as a 5-day grace period for rent payments.

Relocation – Some commercial real estate leases may include a section about relocation. Does this grant the landlord the right to relocate the tenant? Under what terms? Pay attention to this piece as it could greatly inconvenience you, if it ever takes place.

While this is by no means an exhaustive list of red flags of which you must be aware when entering a commercial real estate lease, this should provide a great starting point. What’s most important is to review every document closely, ask for clarification, and seek professional tenant representation early in the process. Having an exclusive tenant representative on your side will provide an added layer of knowledge, experience, and protection that will put you in the best position to negotiate a fair and favorable lease.

Do you have a question related to your commercial real estate lease? Reach out to Omni Realty today so we can help you find an answer!

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Central PA’s Largest Commercial Real Estate Sales of 2018

Posted on February 25, 2019 by Mike Kushner in Blog, Commercial Real Estate, Industrial, Local Market, Office Leasing, Trends No Comments

Central PA’s Largest Commercial Real Estate Sales of 2018

There is much we can learn by analyzing a market’s largest commercial real estate sales in a given year. Looking at each the industrial, retail and office sectors, it’s interesting to see the varying demand for size, price and class from sector-to-sector. This tells us a lot of about the direction of economic growth for a region; and for a real estate investor, it also showcases where the best investment opportunities for the future may lie.

Here is a look at the largest commercial real estate sales that took place in Central Pennsylvania in 2018, grouped by sector and sorted by highest sell price.

INDUSTRIAL

1. 2 Ames Drive – Amazon (Carlisle)

This 700,000 SF, Class A industrial distribution building sold on December 20, 2018 to MetLife Real Estate Investments for $74,600,000. Built in 2012, this building was sold by American Realty Advisors for $106.57 per square foot. The price represents a 4.89% cap rate. American Realty Advisors had acquired the property in 2015 for $62.475 million.

2. 3700-3900 Industrial Rd – Supervalu (Harrisburg)

This 750,000 SF, Class B industrial building sold on May 1, 2018 to Fortress Investment Group LLC for $38,373,479. Built in 1985 and renovated in 1999, this building was sold by Supervalu Inc. for $51.16 per square foot. The lease agreements between Supervalu and the new landlord had an initial term for 20 years, with five five-year renewal options on a triple-net lease.

3. 6345 Brackbill Blvd – Exel Logistics (Mechanicsburg)

This 507,634 SF, Class B industrial warehouse sold on April 5, 2018 to Penwood Real Estate Investment Management, LLC for $33,100,000. Built in 1985, this building was sold by the Abu Dhabi Investment Authority for $66.20 per square foot. The price represents about a 6.15% cap rate on in-place income.

4. 102 Roadway Drive – Saia, Inc. (Carlisle)

This 61,658 SF, Class C, truck terminal along with 40 acres was sold in October 2018 to Saia for $32,000,000. The additional acreage pushed the sales price to over $518 per square foot. YRC, the seller, still owns and occupies the larger industrial building next to this property.

5. 571 Independence Ave – Upper Allen Business Park (Mechanicsburg)

This 378,000 SF, Class B industrial warehouse sold on August 22, 2018 to Prologis, Inc. for $24,971,824. Built in 1999, this building was part of a portfolio sold by DCT Industrial Trust for $66.06 per square foot. Prologis, Inc., a global leader in logistics real estate, acquired DCT in an all-stock acquisition of for $8.5 billion, including the assumption of debt.

RETAIL

1. 6416 Carlisle Pike – Silver Spring Square (Mechanicsburg)

This 342,603 SF power center anchored by Wegmans was sold on April 17, 2018 to The Wilder Companies for $88,810,000. Built in 2007, this building was sold by Silver Spring Square, LLC for $235.87 per square foot. The price represents an in-place cap rate of 7%.

2. 830-870 N. US Route 15 – The Dillsburg Shopping Center (Dillsburg)

This 162,783 SF neighborhood center was sold on September 24, 2018 to Vastgood Properties, LLC for $24,400,000. Built in 1994 and renovated in 2002, this property was sold by Brixmoor Property Group for $149.89 per square foot. The property traded at a 6.333% cap rate.

3. 5301 Simpson Ferry Rd – Giant (Mechanicsburg)

This 51,394 SF retail property sold on August 17, 2018 to Patriot Equity Partners, LLC for $17,540,000. Built in 2004, this property was sold by Exchange Right Real Estate, LLC for $341.28 per square foot.

4. 130 Kline Village – Kline Plaza (Harrisburg)

This 214,628 SF community center was sold to Nassimi Realty Corp. on December 12, 2018 for $8,700,000. Built in 1952, this property was sold by Brixmoor Property Group for $40.54 per square foot. The price represents a 10% in-place cap rate.

5. 1313 Kenneth Road – Dick’s Sporting Goods (York)

This 55,200 SF retail property was sold to the Stewart Companies on December 27, 2018 for $6,250,000. Built in 1988, this property was sold by First Capital Realty Inc. for $113.22 per square foot.

OFFICE

1. 1920 Technology Pky – Pennsylvania Department of Corrections (Mechanicsburg)

This 100,000 SF Class B Office Building sold on December 3, 2018 to Boyd Watterson Asset Management for $26,950,000. Built in 2010, this building was sold by Hudson Companies for $269.50 per square foot at a 7.5% cap rate. The building is fully leased to the PA Dept of Corrections.

2. 1250 Camp Hill Bypass (Camp Hill)

This 84,000 SF Class B Office Building sold on November 27, 2018 to Waterday Properties for $19,750,000. Built in 2015, this building was sold by Hoffer Properties for $235.12 per square foot. The building is leased to Hewlett Packard and Medical Mutual.

3. 1 Trinity Dr E – UPMC Pinnacle FamilyCare (Dillsburg)

This 43,212 SF Class B Medical Building sold on August 9, 2018 to Hammes Partners for $19,000,000. Built in 2008, this building was sold by Anchor Commercial Realty for $439.69 per square foot. The MOB is occupied by UPMC Pinnacle and Presbyterian Senior Living.

4. 909 Elmerton Ave – Pennsylvania DEP South Central Regional HQ (Harrisburg)

This 73,101 SF Class B Office Building sold on August 2, 2018 to Boyd Watterson Asset Management for $14,500,000. Built in 1998, this building was sold by Elmerton 909, LP for $198.36 per square foot. The building is fully occupied by the PA Dept of Environmental Protection.

5. 3801 Paxton Street (Harrisburg)

This 61,198 SF Class A Office Building sold on January 31, 2018 to Arthur L. Walters Co. for $8,425,000. Built in 2006 and updated in 2017, this building was sold by Thomas A. Salvaggio for $137.67 per square foot. The property traded at a 6.86% cap rate.

Closing Thoughts

In Central Pennsylvania and across the nation, it’s fair to say that the commercial real estate market delivered its fair share of ups and downs. Now that we’ve taken a closer look at the largest industrial, retail and office real estate sales of 2018, there are a few interesting points worth noting in each sector.

Industrial – Industrial real estate continues to lead all other real estate sectors with $529 million in sales volume in 2018. The average price was $60 per square-foot, with the average property selling for $4.2 million with a 6.3% cap rate.

Retail – A total of $346 million was invested in Central PA’s retail real estate market in 2018, an increase over 2016 and 2017. The average sale price was $107per square-foot with a 7.5% cap rate.

Office – Annual volume levels for Central PA’s office real estate market were trending down for 3 years running, but 2018 rebounded with $266 million in total sales. The average office property sold for $1.4 million with 8.2% cap rate. Two of the top five largest office sales to take place in 2018 were buildings leased to the Commonwealth of Pennsylvania.

Given the largest and most notable commercial real estate sales that took place in Central PA in 2018, do you notice any other trends this might indicate? Share your insights below by leaving a comment.

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Who Really Represents You in a Commercial Lease Negotiation?

Posted on January 24, 2018 by Mike Kushner in Blog, Tenant Representative/Buyer Agent No Comments

Who Really Represents You in a Commercial Lease Negotiation?

When it comes to leasing commercial workspace, too many tenants mistakenly believe that the landlord’s leasing agent/broker will somehow represent them in negotiations. Unfortunately, this is never the case.

The important question that this article answers is, “Who really represents who in a commercial lease negotiation?”

As a tenant, your wants and interests are usually different than the landlord’s, at times even diametrically opposed. It’s impossible for one broker to represent both sides of your deal faithfully and fairly. There will always be conflicts of interest and the broker most often favors your landlord, not you as the tenant.

Too often, a commercial tenant begins the process of leasing office space without hiring a tenant representative to 100% exclusively represent them. Usually they do not realize that a tenant rep is not at the cost of the tenant, since the tenant rep will normally co-broke a commission with the listing agent.

At some point, tenants then find themselves too far down the road to fully benefit from the expertise, advocacy and unbiased representation of a true tenant rep. This can result in a number of troubling issues and frustrations for the tenant. These include losing the upper hand in negotiations, being subject to unfair pricing and unsatisfactory terms and too late realizing that things could have gone far better if they had a professional dedicated solely to representing their best interests.

It’s important for every commercial tenant to understand the vast difference between a tenant representative and a traditional commercial real estate broker.

Helping us answer this critical question and more is William Gary, Principal at MacLaurin Williams, LLC and founder of The Tenant Rep Channel. Gary’s firm is committed to exclusively representing commercial tenants and owner-occupants and creating valuable resources that help to educate the public on the value of exclusive, 100% tenant representation.

Differences Between Tenant Representatives and Traditional Real Estate Brokers

A real 100% tenant rep should be able to meet all the criteria needed to take the exclusive tenant rep pledge. A landlord’s agent or traditional broker simply cannot make this pledge to tenants and owner-occupants. A real tenant rep never puts him or herself in position to double-end an occupier’s transaction and double-dip on fees/commissions. That’s what traditional CRE brokers frequently attempt to do. It’s their highest goal.

Furthermore, a 100% tenant rep acts as a true fiduciary, advocate and loyal, obedient agent for an occupier. On the other side of the table, the opposing landlord’s agent does this for the landlord. A true 100% tenant rep also conscientiously avoids and turns away from conflicts of interest. Traditional brokers create and run towards them to try and double their fees in your transaction.

Vision and Mission of the Tenant Rep Channel

After resigning from the ITRA Global Organization, MacLaurin Williams, LLC still wanted to have a 100% tenant rep network to serve multi-market clients. Gary explains, “We wanted to compete harder and more effectively against large tenant rep chains and traditional brokerage houses that all perform tenant representation.”

Initially, The Tenant Rep Channel was intended to be an informal 100% tenant rep network just for MacLaurin Williams’ own use. But it escalated when Gary asked two other 100% tenant reps, Chris Carmen (Indianapolis) and Craig Melby (West Palm Beach/Asheville) if they might find a use for it, too. They were immediately interested – and so it grew from there!

Unlike traditional CRE broker networks, The Tenant Rep Channel is an informal, virtual model that doesn’t have any initiation fees, dues, required conferences, travel expenses for airfares and hotels, by-laws or contracts. The mission: Just keep it simple and base it around a shared Google map + list of major markets that every participating 100% tenant rep firm must prominently display on its own website.

Amazingly, the bigger independent, 100% tenant rep firms were just as interested in The Tenant Rep Channel’s marketing tool as the smaller firms. They still felt like they needed a big coverage footprint to compete head-to-head more successfully against the big brokerage houses, such as CBRE, JLL, C&W, Colliers, Newmark, etc., as well as Savills Studley and Cresa as tenant rep chains.

The Tenant Rep Channel’s growing success comes from its ability to provide a big coverage footprint for independent, 100% tenant rep firms. It’s an instant and very real 100% tenant rep network, with most TRC principals having 20 and 30 years of CRE experience. It’s a super heavyweight group in terms of experience, talent and skills.

Omni Realty Group is proud to be a part of The Tenant Rep Channel’s growing network.

How Awareness of the Traditional Broker Conflict Will Reshape Commercial Real Estate

With more education and awareness of the inherent conflicts of interest in the traditional CRE broker model, combined with new resources like The Tenant Rep Channel, you might anticipate that a major shift would take place in the Commercial Real Estate Industry where tenants and buyers would flock to and favor 100% tenant reps over traditional brokers.

However, Gary notes, “Too many occupiers still believe that CRE brokers are pretty much all the same, other than some work for big firms and some for smaller shops.” He goes on to add, “Occupiers often know some CRE brokers as friends or family and they’re comfortable hiring them without understanding the complexity of local agency laws.”

As 100% Tenant Reps, we’ve not done a good enough job of making it clear that the CRE Industry is terribly plagued by conflicts of interest and that these conflicts of interest frequently do serious damage to the best interests of occupiers. Most people can grasp that their attorneys should not have any conflicts of interest in their legal matters; it’s more of a Win vs. Lose situation. But occupiers don’t make the same leap when it comes to hiring CRE Brokers to handle their CRE transactions.

The bottom line is that in order to reshape the Commercial Real Estate Industry, it’s incumbent upon 100% tenant reps to better explain “why” conflicts of interest are so damaging for occupiers. We need to educate tenants and buyers on what can go wrong. Simply saying, “We don’t have conflicts of interest,“ doesn’t resonate with occupiers. It’s not nearly enough.

Occupiers need to learn why conflicts are harmful for them; how they can waste tons of valuable time and spend significantly more money; money that is their valuable net profits.

Gary concludes with these final thoughts, “One thing that we initially hoped would occur on The Tenant Rep Channel is happening. By being connected through this network, creative ideas are getting shared worldwide and some really innovative things are blossoming organically.

The 42Floors Elite Site Widget, which is a full market, commercial property search module for our own websites, is one example. I urge every 100% tenant rep to check it out and really assess the value it could have for your business. We all need to get serious about educating occupiers on the stark differences between 100% tenant representatives and traditional CRE brokers!”

Do you have another question related to the differences between tenant representatives and real estate agents? We welcome you to join in the discussion by leaving a comment below!

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The Truth About Real Estate Commissions

Posted on March 2, 2016 by Mike Kushner in Blog, Commercial Real Estate, Tenant Representative/Buyer Agent No Comments

When it comes to real estate transactions, everyone knows that commissions are involved; it’s how brokers get paid! But what’s not so common knowledge are the various details surrounding these commissions like who actually gets paid, who’s responsible for paying and how much is owed.

Whether you’re the tenant or landlord in the deal, you’ll want to have clear answers to all of these questions before working with a broker or proceeding with any real estate deal. Understanding the “fine print” will help alleviate the stress and potential pitfalls of being uninformed regarding commissions.

Let’s take a look at some of the most essential questions surrounding this important real estate topic…and their answers!

What parties earn a commission?

Typically, a commission is paid to both the listing agent/landlord representative and the tenant representative, if a real estate transaction has both of these parties involved and they are different from one another (here’s why they should be!).

It’s important to note that if you are a tenant looking for a property, you will want to have your tenant representative with you from the very first time you see a property. If another agent (whether you know them/asked them or not and regardless of whether they represent both buyers and sellers) bring you to a property, he/she is legally entitled to a portion of the leasing commission as the “procuring” agent.

You may never see this agent again or benefit from their advice/expertise, but since that agent showed you the property, that agent will be paid a commission. This complicates the situation if you should choose to then hire a tenant rep different from the initial agent who showed you the property – and a commission dispute may ensue. To avoid all this trouble, it is best to establish your tenant rep from the beginning and have only him or her show you properties!

Who is responsible for paying this commission?

After a lease is signed, it is typically the responsibility of the landlord (or property owner) to pay a commission to both the listing agent/landlord representative and the tenant representative. As the tenant, it is not usually assumed to be your responsibility to pay a commission to your broker. This is paid by the landlord at the time the lease is executed, unless otherwise negotiated.

How is the amount of commission determined?

The cost of commission varies and commission is most often calculated as a percentage of the lease value (also referred to as “total consideration”). When the signed lease has been executed and the tenant takes occupancy, generally one-half of the commission (paid by the landlord) is paid to the landlord rep and one-half of the commission is paid to the tenant rep.

For example, a tenant signs a 3-year lease for a 2,000 square-foot space at $20 per SF per year. The total consideration = $120,000 (2,000 SF * $20/SF per year * 3 years). The property owner pays a 6% commission (one-half to landlord rep and one-half to tenant rep). The total commission = $7,200 ($120,000 * 0.06).

It’s also worth noting that an agent may “split” their total piece of the commission, sharing it in some proportion with their broker. Commission splits range anywhere from 50/50 (most common) to 90/10, in favor of the agent.

Real estate services are NOT free.

Real estate transactions typically include commissions that are shared by the agents or advisors representing each party. Even though the property owner writes the commission check, it’s ultimately the tenant that funds the commission – in the form of rent payments (for leases) or purchase proceeds (for sales). Make certain that you are receiving full value from your “side” of the commission by having an unbiased, experienced, licensed real estate advisor assist you with the research for suitable spaces and in the negotiation of acceptable terms and conditions.

Do you have another question about real estate commissions that wasn’t answered in this article? Ask us!

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5 Real Estate Myths that Could Cost You BIG!

Posted on September 3, 2015 by Mike Kushner in Blog, Commercial Real Estate, Tenant Representative/Buyer Agent No Comments

How much do you think you know about real estate? What are often considered to be “basic” concepts can be laced with false information and dangerous myths many people believe to be true.

Falling for such “real estate myths” can result in paying more than you should for a property or signing into unfavorable terms that will continue to hurt you in the long run. How can you prevent falling into these pitfalls? Arm yourself with knowledge and surround yourself with people you can trust to have your best interests in mind!

Let’s get started in the right direction by examining the truth behind some of the most common real estate myths and how you can protect yourself.

MYTH 1: One agent can fairly represent both parties in the same transaction.

Facts: The operative word here is “fairly.” In a true arm’s-length transaction, the parties deal from equal bargaining positions. In addition, neither party is under the other’s control or dominant influence, nor do they rely upon the other’s fairness or integrity. At least that’s how the legal profession views it, which is why it is unethical for both parties to have the same representative in any legal matter.

The real estate industry sees it differently (to the detriment of millions of tenants and buyers), and permits a single agent, or multiple agents from the same firm, to represent both the tenant/buyer and the landlord/seller in the same transaction. This is called a “dual agency” (think “double agent” for the true meaning). Such an arrangement favors the property owner, who receives the highest amount possible, and the real estate agent, who retains the entire commission.

Strategies: Dual agency is the real estate industry’s dirty little secret and should never be tolerated. In practice, many tenants and buyers divulge confidential information to an agent they are led to believe is representing their interests alone, only to discover the agent has an undisclosed conflict of interest when a lease or purchase contract is presented. for them to sign. At that point, it is generally too late to renegotiate the terms of the transaction. Look for a real estate broker who only represents clients like you – either a tenant/buyer or a landlord/seller. Not both.

MYTH 2: Real estate services are free.

Facts: Real estate transactions typically include commissions that are shared by the agents representing each party. Even though it is the property owner who writes the commission check, it’s the tenant or buyer that ultimately funds the commission – in the form of rent payments (for leases) or purchase proceeds (for sales).

Strategy: Make certain that you are receiving full value from your “side” of the commission by having an unbiased, experienced, tenant rep/buyer agent assist you with the research for suitable spaces and in the negotiation of acceptable terms and conditions. The landlord/seller will most certainly have someone working on their side; you should too!

MYTH 3: Large real estate companies, and/or those with many listings, are the best sources of information for tenants or buyers.

Facts: Full service real estate companies employ dozens (even hundreds) of agents, brokers, property managers and support personnel, and are best suited for property owners who require property management and brokerage services. Regardless of their size, companies that list properties have inherent and unavoidable conflicts of interest when representing tenants and buyers, and tend to suppress competitive negotiations by steering them to the properties they control.

Strategies: Because tenants and buyers seek objective and rigorous representation, they should avoid agents and brokers from companies that list properties.. A real estate broker who does not exclusively represent the buyer/tenant may not be presenting all of the options available to you. For example, you are looking for office space and your broker represents several landlords who have office space available. You are likely going to be pushed toward choosing from these properties first before they show you outside properties with which they have no association. While this makes perfect business sense for your broker, it doesn’t benefit you in the same way. You deserve a broker who will exclusively represent your interests as a buyer/tenant and do all the research necessary to find your ideal property – beyond their own internal client book.

MYTH 4: Leases are less complex than purchases.

Facts: Even the most basic commercial leases contain several dozen interrelated variables (tax and operating expense escalations, work letters, electrical charges, sublease and assignments rights, alterations, and options to expand or renew) that are open to negotiation, and that affect the overall cost of occupancy. As a result, leases are generally more complex transactions than purchases.

Strategy: Recognize that, in order to make a fully-informed leasing decision, many terms and conditions need to be identified, addressed, and negotiated. Once the economic terms have been negotiated to your satisfaction, retain a competent real estate attorney to review and comment on the legal sufficiency of the lease agreement.

MYTH 5: Real estate agents are experts in real estate.

Facts: Expertise in any field is the result of much training and accumulated knowledge. Yet it takes the equivalent of attending just two weeks of classroom instruction, and then passing a very basic examination, to obtain a real estate license. This limited education is hardly sufficient to qualify anyone to help business people make some of life’s most significant financial decisions.

Strategies: Tenants and buyers have a legal right to hold real estate agents and advisors who imply or claim to have expertise in an area of specialization accountable for their actions and recommendations. Select your advisor with the same care as you would an attorney, accountant, or a senior member of your decision-making team, and make certain they have significant and verifiable experience in solving your specific problems.

The Bottom Line: Be aware that commercial real estate is a highly-competitive and adversarial business. While negotiations need not be combative or confrontational, the process, nevertheless, pits parties with opposing interests against each other. In the final analysis, a real estate transaction is only as good as the thoroughness of the research, the quality of the information, and the experience of the negotiator…and that’s a fact.

What other real estate topics have you wondering whether they are fact or fiction? Share your questions by commenting below and Mike will personally answer you!

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4 Risks of Working with Real Estate Brokers Who Represent Both Buyers and Sellers

Posted on June 10, 2015 by mike.kushner in Blog, Tenant Representative/Buyer Agent No Comments

It is a safe observation based on over 30 years of real estate practice that the vast majority of consumers – in this case real estate buyers/tenants and sellers/landlords – do not understand the concepts of “agency.” One might also observe that a significant segment, if not most, of the licensed real estate practitioners do not completely understand the concepts of “agency.” This is not so much an indictment of real estate licensees as it is a statement on the twisted, awkward and convoluted nature of agency laws that have been imposed on our industry by our esteemed governing and regulatory bodies.

The Real Estate Licensing and Registration Act (RELRA) requires that consumers be provided with a Consumer Notice at the initial interview or meeting. Instead of boring you with an explanation of the entire Consumer Notice, I am going to tell you about the most important part:

Buyer Agent (or Tenant Rep): As a buyer agent (or tenant rep), the licensee and the licensee’s company work EXCLUSIVELY for the buyer/tenant even if paid by the seller/landlord. The buyer agent (or tenant rep) MUST act in the buyer’s/tenant’s best interest, including making a continuous and good faith effort to find a property for the buyer/tenant, except while the buyer/tenant is subject to an existing contract, and must keep all confidential information, other than known material defects about the property, confidential.

What does all this mean? If you are buying or leasing commercial real estate you want a Buyer Agent/Tenant Representative to represent you. Here are four risks that you don’t want take:

Risk #1: Your broker will be representing two opposite interests

When you think about a tenant or buyer and a landlord or seller, each has a need that is opposite of one another. Everyone involved also wants the best deal at the best price. This is where the inherent conflict exists. A real estate broker cannot equally represent both parties’ interests while negotiating hard. A better deal for one party means a lesser deal for another party. Someone will always play second fiddle. Do you want to risk this person being you?

Instead, look for a real estate broker who only represents clients like you – either a tenant/buyer or a landlord/seller. Not both.

Risk #2: You may be pushed into an option that is not best suited for you

The second risk of working with a real estate broker who does not exclusively represent one party is that you may not be presented with all of the options available to you. For example, you are looking for office space and your broker represents several landlords who have office space available. You are likely going to be pushed toward choosing from these properties first before they show you outside properties with which they have no association.

While this makes perfect business sense for your broker, it doesn’t benefit you in the same way. You deserve a broker who will exclusively represent your interests as a buyer/tenant and do all the research necessary to find your ideal property – beyond their own internal client book.

Risk #3: You will not have your broker’s undivided time and resources

You are not likely to ever be your broker’s only client (unless business is exceptionally slow). A good broker will try and dedicate adequate time to meet your needs in a timely fashion, but a broker who represents both sides will have even less available time for you. In addition to fielding your questions, requests and negotiations, they will also be juggling the same from the landlord or seller with whom they want you to sign the deal. .

Ensure your needs will made a priority by working only with a broker who exclusively represents you as a buyer or tenant.

Risk #4: You will get a “Jack of All Trades”…but a master of none

As mentioned in the introduction of this article, for some industries it is an advantage to be a “Jack of All Trades.” In real estate, however, specialization if critical for remaining unbiased and motivated to only work in the favor of one side of the negotiating table. A similar example would be a lawyer. Would you want to be represented by someone in court who was advocating for your case as well as the person arguing the opposite side? The same is true when selecting your real estate broker. You don’t want a mediator; you need someone who is completely free to take your side and negotiate 100% in your best interest…and this is a an exclusive tenant representative or buyer agent.

Have you worked with a real estate broker who represented both tenants and buyers as well as landlords and sellers? Was your experience good or bad? Share your story by commenting below!

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Success Story: Pennsylvania Coalition Against Domestic Violence Finds New Space to Transform Work Flow

Posted on October 29, 2014 by mike.kushner in About Us, Blog, Community, Local Market, Success Stories No Comments

Every day I work exclusively with different businesses and organizations to help them improve their efficiency and work flow by finding an office space that better meets their needs – and budget. It’s worth taking a moment to reflect on some of the success stories of my clients and the difference their new work environment has made for their organization as a whole.

This month, let’s look at the Pennsylvania Coalition Against Domestic Violence and how their change in office space has improved their ability to better serve their constituents. Peg Dierkers, PCADV’s Executive Director, was kind enough to offer some insight into her experience working with Omni Realty Group and the comparison between her old office space versus her new location.

But first, some Background…

The mission of the Pennsylvania Coalition Against Domestic Violence (PCADV) is to eliminate personal and institutional violence against women through programs providing support and safety to battered women, direct services, public information and education, systems advocacy and social change activities. This honorable organization has helped hundreds of local women escape violence and improve their quality of life.

PCADV’s old office was located in the Gateway Corporate Center on Route 22 and was originally flex space that had been converted into office space. It was easy to see that the industrial space was not made for an office environment. It was a maze of space that limited workflow and segmented staff, not to mention its inefficient use of energy that raised heating and cooling costs.

Fortunately, I was connected with PCADV and was excited to jump right in to help solve the problem.

Finding a new “home”

“Mike took special care to first understand our organization,” said Peg Dierkers, Executive Director. “He wanted to know about our company culture, workspace needs, where employees were commuting from and also considered our desire to stay easily accessible to people who need our services.”

Finding the right workspace for a business or organization is about so much more than simply square feet. There are countless options that can accommodate size, but what you really need to consider when choosing the perfect office space for your business are the various things that contribute to your efficiency, functionality and ultimately your culture.

I identified a variety of spaces well-suited to PCADV’s unique needs and toured each space, offering expert advice on both the benefits and limitations to consider. When the ideal space was identified, I then negotiated hard for a good deal and provided market research for comparison. I also negotiated a detailed work letter with the landlord on behalf of PCADV to ensure the space would be customized to fit their needs.

The result

It took about one year from the time we began looking for new space to move-in, but the process was certainly worth it! PCADV’s new “home” is located at 3605 Vartan Way, Suite 101, Harrisburg, PA 17110 and the staff couldn’t be happier. They have been able to update and modernize nearly everything – even including their IT infrastructure. The space is much more communal and promotes cross-collaboration among employees. Most importantly, especially for a non-profit, is that the new lease is saving PCADV a ton of money which is more resources they can put back into the community.

This was Peg’s first time working with a commercial broker that is exclusively tenant rep/buyer agent and the experience is one she will always remember. Her biggest piece of advice for any other business seeking new office space is, “Never go it alone! Omni is a built-in expert consultant that can proactively eliminate problems and increase the value of the space you select.” Identifying the right space and negotiating a favorable lease enabled PCADV to move to the space they are in today.

The view of PCADV’s new office space via Google Maps.

The view of PCADV’s new office space via Google Earth.

Are you a business or organization looking to expand into a bigger commercial office space? I can help match you with the perfect location just as I did for PCADV. Contact me today for a free lease review and office space assessment!

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