Business Relocation: Nobody Likes a Double Agent
Was James Bond a double agent? NO!
Yet, hundreds of thousands of businesses around the world unknowingly invite double agents into their boardrooms and inner circles every year. You know a double agent is 'trouble' because they have a built-in conflict of interest.
Does one give the secret formula to Interpol or Scotland Yard? Whichever side ends up with the formula wonders whether it's the real thing or a cleverly disguised ploy to encourage them to make a poor decision.
Governments, businesses, trade associations and "Mom and Pops" all face similar situations when their organizations reach the dreaded time in the business cycle when their lease is coming to an end or when an expansion or contraction requires them to relocate. This is always a traumatic time for anyone who leases space for their business or organization.
Today there are over twenty-five million businesses in the United States alone and thousands more governmental agencies leasing space. Many tenants are not aware that most commercial real estate brokerage companies concentrate on providing services to the landlord community. This only makes sense for the brokers who spend considerable time developing relationships with owners who control large blocks of lease-able space, which will be a source of consistent leasing commissions for extended periods. These broker/landlord relationships take time to develop and are jealously guarded once obtained.
Every member of a firm is encouraged to support the relationships that the company develops. This approach is not particular to real estate brokerage; lawyers, accountants and other 'consultants of trust' face similar situations. The big difference is -- the real estate industry allows their personnel to represent both sides of a transaction.
Would you choose a lawyer to represent both sides in a divorce or a surgeon to give you both a first and second opinion about your surgical needs?
Many business owners and managers are unaware that "their" real estate agent may be working for a brokerage company that has strong business relationships with multi property landlords. Even worse, the agents themselves may be representing one or more landlords who are offering leased space to tenants in the market. Which landlord does this broker represent or golly, does the broker represent the tenant or one of the landlords. Decisions, decisions, how does one choose?
It is impossible to fairly represent both sides of anything. After all, we wouldn't have 'sides' to consider at all if that were the case.
Landlords hire brokers to insure their best interests are represented regarding such things as which spaces in the building need to be filled, limiting tenant improvements, negotiating landlord oriented leases and getting the best price for their property. Nothing wrong with trying to do the best you can and hiring experts to give you an edge!
The problem is that most buildings have marketing and negotiating specialists representing landlords and many tenants are out in the marketplace un-represented or represented by a firm or maybe even a broker who also directly or indirectly works for the landlord. Because it is more lucrative to work for landlords, few brokerage firms are organized to represent just tenants in the market place. Tenant Representation as a specialty started several years ago and is steadily gaining popularity in this country and overseas as more and more companies become aware that alternatives to dual representation exists.
Five Tips to Hiring a Tenant Representative
First - Find a firm that specializes in just representing tenants. This should be possible in most major cities and suburbs, but tougher in smaller areas where brokers try to do it all. If you're a larger company and have offices in multiple locations a number a firms specialize in a very sophisticated set of services designed specifically for you.
Second - Get a written commitment that the broker has no conflicts of interest and will represent only your business. Listen carefully for, "we have effectively represented both parties for many years," "we have a way to handle that," "no conflicts of interest at the present time."
Third - Checkout their track record and references. Tenants who have had a good experience with a Tenant Representation broker will be happy to talk about it, because it is a unique experience.
Fourth - Review their tools and services to ensure what they have to offer are what you need. Tools might include strategic planning, lease comparison analysis, lease vs. buy investigation, project timeline management, preferred vendor recommendations, move management, and project and/or construction management.
Fifth - Make sure the tenant representatives working on your account are in fact knowledgeable and experienced in relocating a firm like yours. The good news here is that most of these firms have very experienced personnel and a strong commitment to service.
John Carpenter, Former Regional President of one of the big three national commercial brokerage firms and Principal of Carpenter/Robbins Commercial Real Estate, Inc, can help your organization move with as little pain as possible and not get ripped off in the process. For ongoing real estate support with a professional who has personally sold or leased millions of square feet of commercial properties go to www.crcre.com .
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