When a business is looking for space to lease, they need to understand that commercial real estate is very different from residential real estate. Differences exist in how properties are represented and leased, which has led to there being two different types of commercial real estate brokers to do different jobs. While it is not necessary for a company to use an agent, most who work with commercial agents find it to be very beneficial.

Commercial Agents – Two Types

In commercial real estate, there are listing agents and tenant representatives. They may work for commercial real estate brokerages or for themselves.

  • Listing Agents – A commercial listing agent lists properties for lease. They represent the property owner or landlord by working to lease the property as well as during lease negotiations. Listing agents earn commission, which is paid by the landlord or owner (lessor) once a lease is successfully signed.

  • Tenant Representatives – A tenant representative does not list property; they represent clients by helping them find properties to lease. This agent represents client interests by negotiating with listing agents to obtain the best leasing arrangements for their client. Tenant reps are also paid a fee once a lease is signed, which the company leasing the property (lessee) pays.

Commercial real estate brokerage firms may employ only listing agents or both listing agents and tenant representatives. It is important that a lessee work with tenant reps who are not associated with listing agents on any property of interest. It is best to get a letter of representation from tenant reps, a contract between both tenant and hired representative that confirms the rep is working only for the tenant’s best interests.

Commercial Property Leasing – Experience Required

It is possible for a lessee to look for property and negotiate a commercial lease on their own; however, it is in their best interest to work with commercial real estate brokers. These representatives can help determine the type of space required and negotiate with the listing agent on lease terms. There are many ways to negotiate when leasing commercial real estate, some of which are very creative. Experienced representatives who understand current leasing trends can get the best lease terms for their client.

Commercial real estate transactions are complicated; working with professional commercial real estate brokers is an economical choice to make. The benefits of using a tenant rep will be evident once a lessee realizes they can rent a better space, have more necessities and improvements, and have better leasing terms than without tenant rep services. There are many legal requirements involved in leasing commercial property as well as a need to understand the current commercial market, an essential part of the negotiations process.

When leasing commercial space, there is no better tenant than the educated one who understands the services commercial real estate brokers provide. Once a company understands this, they can be sure they are working with the right professional who will help them negotiate the best leasing terms!

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