As companies try to cut back on outsourcing and other business expenses, the question of why hire a broker to help you with your real estate needs might pop up.
“Look at the expertise involved that a real estate broker brings to the table in terms of market knowledge, research, deal negotiations and market comps,” says John Ferguson, senior managing director for CB Richard Ellis in Atlanta, which celebrates its 100th anniversary this year. “Those are all aspects of the transaction that the typical individual is not privy to, and that’s the value of a real estate broker.”
Smart Business spoke to Ferguson about how to find the right agent for your commercial real estate needs.
Does the size of the transaction dictate the importance of a real estate professional?
No, it really doesn’t. Most people in the industry work on all sizes of transactions. On smaller transactions, the client may not have the same level of expectations - but a good real estate professional should believe in performing at a high level for his clients no matter what the size.
Many times, the value that real estate professionals provide may be better realized by smaller tenants than larger ones. It really depends on the value proposition that the client or tenant may be looking for.
At what point should a professional be brought in?
Very early in the process. There are various phases that occur during the life of a transaction including needs analysis, site selection, negotiation of terms, lease negotiation, project management/construction and - potentially - relocation.
Additionally, customer-focused companies believe in maintaining a relationship with a client through the duration of the lease term. Inevitably, clients will require real estate expertise and advice on expanding, relocating, reducing or disposing of their space. Very few tenants’ needs stay constant through the duration of their lease. When some critical factor occurs requiring a change in business, it is important to have an agent.
How are real estate agents retained?
Fees are paid by the landlord. They are compensated upon the execution and completion of a particular transaction. If a client reaches out to us and we don’t close the transaction, then our efforts are provided as a consulting service on behalf of that client.
What are the best methods for finding and retaining a broker?
There are many ways. Referral is certainly a common one.
People are often familiar with industry leaders, and typically companies like ours initiate the relationship. I would not designate us a cold-call firm, per se. We are modeled more on selling relationships, which includes referrals.
Are Atlanta’s strong economy and low unemployment rate short-term trends or an indication of long-term stability?
Atlanta’s real estate business is driven by job growth. Atlanta traditionally has seen strong job growth based on the location of the city - specifically being the the Southeast’s business and commerce hub, and global access via Hartsfield-Jackson Airport. Many corporations locate their headquarters here. I am confident that Atlanta will continue to be attractive to both corporations and job pursuers.
I am also confident in the long-term stability of our industry. Atlanta has various submarkets within the city, so it is hard to stereotype the entire metropolitan area. For example, Buckhead and Midtown have both been strong with heavy construction activity and positive absorption.
On the other hand, some large companies have left Downtown and migrated toward Midtown, leaving several sizable vacancies in the traditional CBD submarket, such as 191 Peachtree <m> which is arguably one of the nicest office buildings in Atlanta. It now has about 800,000 square feet of vacant space out of a total square footage of 1.2 million. As a result, you see decreased rental rates in Downtown. Now you can get deals accomplished at terms similar to those of 20 years ago.
Will the industry stay strong in Atlanta?
Yes, I believe so. Atlanta is a vibrant real estate community. It has no real boundaries or barriers to entry. I think we will continue to see sprawl within our marketplace. The metro Atlanta market of 4.5 million people will continue to grow. Part of that growth is based on the many academic institutions here that draw students to the area who stay to live and work in Atlanta after they graduate from college, boosting the job pool and economy even more.
JOHN FERGUSON is the senior managing director for CB Richard Ellis in Atlanta. Reach him at (404) 504-7870 or [email protected].