Today’s economy is presenting several opportunities for companies to move into better and larger spaces. Deals are there for the taking; however, finding and securing them is a whole other story.
Even though the commercial real estate process is long, detailed and arduous, many companies are trying to secure deals on their own due to cost-cutting measures.
But, says J. Howard Rambin III, the CEO of Moody Rambin Interests, going it alone will end up costing a company more than it saves, which is why he recommends working with a quality tenant representative.
“A good tenant representative knows the intricacies and nuances of the market, the landlords and the financers,” Rambin says. “If you’re not in the real estate market all day, every day, there’s no way you can know all of that.”
Smart Business spoke with Rambin about tenant representation and how a tenant representative can help your company save time and money and find the perfect space.
Why is having quality tenant representation so important in today’s business climate?
Now more than ever, companies are looking for value. Tenant representation will save you time, money and the hassle of having to run around town looking for the best deal. Tenant representatives have a proprietary, up-to-date, industry-comprehensive database of all of the vacant office and industrial space in your area and nationwide. They can determine the exact spaces that match your desired image and operational requirements. They’ll also help you ensure the operational and cost efficiencies of the space.
Besides that, tenant representatives have working relationships with landlords and owners. If you try to call a landlord or building owner, you’re going to play a lot of phone tag — they are historically bad about returning calls to the public. But, those same owners and landlords know the tenant representatives, and they know that the reps won’t waste their time. Your tenant representatives will do all of the market studies and preparation work, and they’ll get the landlords and owners to the table.
No matter how well you may know your city, market or industry, we all need professionals to help us navigate the details and nuances of real estate transactions, especially today, when every dollar counts.
What makes for a good tenant representative?
More than anything, a tenant representative has to instill trust in you, the client. He or she will do this through great communication, a proven track record and an intricate knowledge of the market. If any of these pieces are missing, you should look elsewhere for tenant representation. Bottom line, you want someone who is more concerned with your goals and objectives than their own commission.
What are the consequences of working without a tenant representative?
It’s like if you try to represent yourself in a complex court case or give yourself an operation — if you don’t know the ins and outs of the process, several important details can be missed. Landlords are pros; they lease properties all day, every day. A typical tenant only goes through the lease process every three to 10 years. A tenant representative will help you negotiate and gain leverage with the landlords and owners. The rep will have knowledge of other deals the landlord did in the past, market conditions, how much the owner paid for the building and upcoming lease expirations, among many other factors. If you try to go it alone, you’re at the mercy of the landlord and owners.
At what point should a company contact a tenant representative?
Obviously, the sooner the better — don’t wait until you absolutely need new space to start looking for one. Typically, the larger the tenant, the more time it takes. The lead time for an extremely large company is usually two to three years; for a smaller company, six to seven months.
What types of cost savings can be realized by utilizing a tenant representative?
The key here is to focus on the cost of occupancy, not the rental rate. Like when you buy a car, you need to look at the total cost of ownership over the life of the car, not just the sticker price. There are several items that can be put into a lease outside of the rental rate that will nickel and dime you to death over the course of the lease. A tenant representative will help you avoid these costs, typically saving you anywhere from 10 to 30 percent.
What questions should be asked when meeting with a prospective tenant representative?
When meeting with a prospective tenant representative, ask the following questions:
? What is your experience in this market and with space in the size I’m looking for?
? How will you communicate with me throughout the process?
? What is your current workload? Will you have the time and energy to focus on my deal?
? Is what I’m looking for consistent with the other deals you do, or will I be a small fish in your big pond?
J. Howard Rambin III is the CEO of Moody Rambin Interests. Reach him at (713) 773-5504 or HRambin@moodyrambinint.com.