What is Retail Tenant Representation?
In every leasing transaction there are two parties involved; the tenant and the landlord. Plainly stated, tenant representation is when a tenant appoints another party – in our case a licensed real estate broker – to represent the client concerning all aspects of negotiating a leasing contract with a prospective landlord (or the landlord’s appointed representation).
Why do I need a Tenant Representative?
If you consider a typical residential real estate transaction, you have a seller (landlord) and a buyer (tenant). Each is usually represented by their own real estate agent. Sadly, this is not always the case in a retail commercial leasing situation. Often a new business owner will negotiate the terms of their lease with no professional assistance and they can easily make mistakes that cost them time, money, and lots of aggravation. Those mistakes can contribute to the failure of a new business.
How much will this Tenant Representative cost me?
Usually, in a commercial real estate transaction in the State of California, it is the landlord who pays all brokers fees. The broker who represents the landlord in the transaction has negotiated a percentage of the overall total of the contract to be paid to that broker once the transaction is completed. That broker will then share a certain percentage with the broker who represents the tenant. Under those circumstances, the tenant receives the Tenant Representative’s services at no cost.
But as with everything in life there is always a catch. Not everything goes according to plan and it is not unusual to run into a landlord who is not willing to pay brokerage fees under any circumstances. In this situation you will want to use care and it may be necessary to work out a compensation agreement with your Tenant Representative. It may cost a little more money in the beginning but it will save you money in the long run.
Come on! This isn’t rocket science we’re talking about here; do I really need a Tenant Rep?
Can you afford not to have a Tenant Representative? When a Real Estate broker negotiates a listing agreement with a landlord, he makes a pledge to his client to get the best terms and the best rate for the landlord’s property. If you as a business owner end up negotiating directly with the landlord’s broker do you still think that the broker is going to have your best interests in mind? The more money he makes for his landlord the more money he makes for him or herself. Not to mention that there is no need for that broker to share the commission with another broker if there is no other broker involved.
As a business owner, it is absolutely in your best interest to engage a professional who studies the market every day and knows the area where you want to do business. When it comes to negotiating the terms and provisions of a long term lease, you need someone who understands what the current market trends are, what conditions can be reasonably expected, and what concessions may be necessary.
Still not convinced that you need a Retail Tenant Representative?
Then contact me and let’s arrange an appointment. If I can’t convince you then, I’ll pay for the coffee.