Some property owners of commercial real estate may not understand the reasoning behind why a tenant who has been renting a retail or industrial space for some time, perhaps 5 or 10 years, would want to include a commercial real estate broker tenant representative as an advisor when it is time to renew the lease, change the lease to include an expansion, or agree upon some other transaction with the landlord.
If you think about it, how is a renewal any different than an initial lease transaction? Does the commercial lease not need the same expertise, market and lease knowledge, and experience that can only be assured by engaging a professional advisor? Craig Trbovich, Sales and Leasing Advisor at Commercial Properties, Inc. commented in a LinkedIn Discussion Group, “Even if you have real estate and contract experience, it’s current market knowledge that will be invaluable. And being in the trenches every day is the only way to be current.”
Today, it is critical for top corporate executive to provide the company’s stakeholders with only the best financial decisions to ensure maximum profitability. Yet, a small business or corporate executive is not an expert on negotiating leases for commercial real estate. A professional advisor can help the tenant best determine the answer to questions such as:
· How large should the leased facility be to need the tenant’s needs?
· Exactly what configuration of space bets suits the business’s needs?
· What interior improvements need to be performed and who will pay for these changes?
· What is the best length of lease term is optimal for the tenant?
· Should the tenant secure rights for expansion or consolidation?
· What other options should be negotiated into the lease?
· Can a period of free rent be rolled into the negotiations?
· Is the landlord and building in good financial condition?
· Should relocation be seriously considered?
The owner of the commercial real estate being leased would probably quite pleased if the leasing business does not want a tenant representative because negotiations will likely be very easy and the landlord will get options that benefit them rather than the business. Daniel Rudd, Executive Vice President and Office Broker at Colliers International states, “It is short sighted for a tenant not to have representation and the tenant is ceding the landlord an incredible amount of leverage.” With a broker, the tenant can be assured they have someone fighting for their right and making sure their best interests are covered.Lease Negotiations , Office Leasing Tips , Office Relocation , Office Space Negotiations , Tenant Representation