The commercial real estate landscape is changing, which has made finding the perfect lease for a business more challenging than ever. Commercial property leasing and sales is entering a point where there is more finesse needed to secure the perfect deal; tenant reps who handle such work certainly must be aware of these changes. As the industry is changing, so is the role of the tenant representative.
The Tenant Representative’s Job
The commercial real estate market is complex – and tenants need a trained real estate representative to help them with such complexities. This is the essential role of the tenant rep, to navigate and negotiate for the client to find the best real estate deal possible. It involves a delicate mixture of thorough knowledge of current commercial market trends and rules, tenant needs, and understanding of landlords – all at the same time. The best tenant reps must have the ability to maneuver negotiations on properties without going overboard and losing the deal. Experienced tenant reps know how aggressive to be with a landlord to get a lease signed successfully for the benefit of their client, while keeping the landlord satisfied.
Commercial Real Estate Current Trends
In the past few years, tenant reps have watched the real estate market experience tremendous ups and downs in both residential and commercial sectors. The fluctuating economy has affected commercial leasing in such a way that many companies are either making do with what they have or even downsizing, as the work structure of many businesses is also changing. This has created a more challenging lease environment, with a huge amount of properties available at times – and not enough at others.
Tenant reps say that commercial leasing is especially competitive right now. There are fewer spaces available for lease, which makes it a landlord’s market. Negotiations are more difficult, with many companies interested in one space, allowing landlords to refuse to accept terms that are not agreeable.
Tenant Rep Broker – A New Role
To be successful for their clients, the role of the tenant rep has begun to expand. Where it once only catered to what the client needed and how to get that from a landlord, experienced tenant reps now balance both sides a little more. Although still working for the best interests of their client, success in today’s market means acknowledging a landlord’s interests and finding a better middle ground.
Does this mean tenants may need to be more flexible with wants and needs than before? Probably; however, the alternative is being completely ignored in favor of another tenant who is willing to accept the landlord’s terms. With a shortage of spaces for lease, that is not always a good option. The answer is for a tenant rep to assume the broker’s hat as well and guide negotiations to an eventual meeting point somewhere in the middle. The tenant is still the tenant rep’s main responsibility; however, these commercial agents must now more carefully skirt the line between asking for more from the landlord or suggesting the tenant accept the terms and plan for other ways to achieve certain goals in the future.
It is important for commercial realty clients and tenant reps to recognize that times have changed – and tactics to get the best lease possible are changing as well. Tenant reps experienced in such negotiations must take more of a middle ground, more broker-type role, and help their tenants understand the current need to do so. It is all still a much better option to use these experienced commercial tenant reps than trying to negotiate alone!
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