Running your company is your primary business.  Hopefully, you don't have to lease new office space or negotiate renewals more than every five to ten years.  For the most part, businesses lease office space only a few times throughout the life of the company, while landlords lease office space 365 days a year.

Landlords will hire a listing agent to help market the property and advise them which definitely gives them an inequitable advantage.

Poise this landlord advantage by engaging the services of your own skilled tenant representative.

Numerous tenants think that by hiring a tenant representative they will end up having to pay a higher lease rate.  An experienced tenant will make sure you don't make any mistakes throughout the course of negotiating, saving you a lot of money in the process. 

Much more money will be saved in the transaction than any fees earned by the tenant rep if you hire the right tenant rep.

Consider the following when determining whether to use the services of a tenant rep:

1. Real estate fees are built into the cost of the lease
2. The landlord's agent will keep the entire commission if you do not have a tenant rep on your side
3. The commission fee is split between the listing agent and the tenant rep if you hire a tenant rep
4. The listing agent has a fiduciary responsibility to the landlord to obtain the most rent and the least concessions.  The landlord rep will always have the landlords best interests in mind.
5. By not engaging the services of a tenant rep, most often will not save you the commission and you will most likely pay much more for your office space.

Real estate is the second-largest expense for most companies after payroll.  Every dollar saved on your lease goes directly to your bottom line.  In good economic times landlords want the highest possible rent for the longest possible guaranteed term.  In challenging markets landlords want shorter terms anticipating higher lease rates ahead. Tenants typically want the lowest possible rent, the most amount of concessions and the greatest lease flexibility. An experienced tenant rep will develop what I like to call "a frenzy amongst the landlords" and help you to get into a lease drafted in your best interests - not the landlord's.

Choose the Right Tenant Representative

When picking a tenant representative, always go with a company that only represents tenants.  This will prevent any conflict of interest.  As I always preach, dual agency real estate companies are in the business of obtaining listings on buildings.  80% of their revenue is derived from landlord representation.  How can a supposed tenant rep in a dual agency company possibly negotiate the most aggressive transaction on your behalf if the ultimate goal of the real estate company they work for is more interested in a listing on that particular building rather than your bottom line. The best tenant representatives are business consultants that specialize in exclusively representing tenants.  They must understand your business as much as possible including: budgets, growth projections, number of employees, image, layout, location(s) and parking requirements for example. The tenant representative must have the ability and confidence to take control of the process at the right times with the experience and willingness to be a tough negotiator. They need to know how to raise the right issues and questions and at the same time facilitate a well thought-out decision process. Only work with a tenant rep offering experience closing deals on the specific type of office space you are looking for. Your tenant rep must have enough deal making proficiency and market knowledge to deliver on the particular type of space your business requires.

Define Your Space Needs

An experienced tenant representative will help you calculate your tangible need for space and optimal layout. Your tenant rep should help you maximize the efficiency of space usage, which may decrease your rentable area.  Your tenant rep will prevent you from wasting time on property negotiations that are not right for your organization. As part of the process of defining your space requirements, you should also consider geographical areas, the quality of space desired, the image you want your new space to portray, and how that ties into corporate objectives. An experienced tenant rep can be invaluable in that process, as well as help you to calculate the possibility for future expansions.

Consider Alternatives

This entails more than searching the available listing services. A professional tenant rep can identify a property that is not an obvious choice.  An experienced tenant rep will have a general market knowledge of 'deals' available, and will verify the terms and conditions associated with each property. A tenant rep will help you narrow down the alternatives, and schedule tours with the top properties that meet your requirements. After touring the different locations your tenant rep will help you go over space plans as they relate to each property, and help narrow down your decision further, usually to a few alternatives. The tenant rep will present proposals from those properties, and perform layout efficiencies and financial analysis on the responses. At that point the tenant representative will help you to choose the top alternatives and prepare to make offers.

Create a Bidding War Among Landlords

A good tenant rep knows that creating competition for your business will maximize your negotiating position.  The result can be concessions and incentives that exceed the norm in the marketplace.  The tenant rep will protect your interests during lease negotiations, act as a buffer between you and the landlord, and ensure that you come away with terms that meet your present and potential future needs. For example, a tenant rep would ensure you retain such options as subletting in case you eventually downsize or outgrow the space. A professional tenant rep is familiar with real estate forms and documents, and having them prepare all proposal requests and letters of intent can help resolve issues before the final lease is prepared.

Lease Renewals and The Tenant Reps Role

The services of a tenant rep during a potential lease renewal is even more important than the initial deal. Renewals are usually a difficult process for a number of reasons. Often landlords feel they have provided quality services and amenities during the initial lease term, and that an existing tenant should not require the services of a tenant rep for a renewal offered at market rates.  What landlords don't want you to know is renewals at market usually result in a huge windfall for them.  

Nothing contained herein is to be considered legal advice. Always seek legal advice when evaluating any legal document.