When considering who should represent your vacant commercial space, there are multiple areas to deliberate. Including creating a long-term, stable environment in which the tenants can conduct their business while maximizing asset operating income. While keeping in mind, that tenants evaluate a space not only throughout the lease term but also during the negotiation and move-in phases. This understanding is paramount when selecting a leasing agent or broker.
Patrick G. O’Healy, SIOR with SIOR HQ warns that making a decision where “relationship elements drive the selection” can allow for a symbiotic relationship, but there are other important factors that must be considered. “Working with someone who listens, communicates well, and is user-friendly” is a good start, but ensuring the candidates are qualified requires a deep look into their qualifications and marketing strategies.
Conducting interviews with the leading specialists within top brokerage firms helps to establish a list of qualified candidates, which can then be reduced to the three most qualified for the assignment. Below is a helpful guideline when selecting commercial real estate brokers and leasing agents.
Determine Qualifications
- Obtain an Experience Profile – How long have they been selling and/or leasing commercial real estate?
- What property type/geographical area do they specialize in?
- How many transactions have they completed in their career? Obtain a list for the past 12 months with property specific information.
- What is the character of their brokerage company?
- Obtain references, including property owners, tenants, and professional service providers (i.e., Escrow Companies) that they have worked with in the past few years – Call them and listen to their feedback.
- Ask for examples of challenging transactions and how they overcame them.
Important aspects to evaluate when choosing a broker or leasing agent are the transaction costs, such as leasing commissions, tenant improvements, rental concession (if any), lease term, and investment cap rate. All should offer the most favorable terms to maximize the property value.
Require an Assessment
- What are the characteristics of the likely buyers/lessees?
- How long is it estimated that the property will take to sell or lease?
- Ask for a list of comparables – properties in the approximate size range that have leased or sold in the past 12 and 24 months in the same submarket, including sale/lease price per SF, buyers, and use. Then determine how closely the comps match a current assessment of the subject property.
- How is their negotiation expertise and application – in terms of lease rates, pre-paid rent or concessions, tenant improvements, and lease preparation?
Securing tenancy in today’s competitive commercial real estate environment involves much more than responding to requests for information and negotiation. Diligent efforts must be made to ensure that prospective and existing tenants are attracted and retained through professional responsiveness and attention to detail.
Identify the Marketing Strategy
- Obtain a detailed marketing program – If the initial plan does not work, what is the backup plan? Is it flexible enough to respond to changing market and business demands?
- What is the Marketing Strategy and what tools will be used to accomplish it?
- Learn what challenges they foresee and how they propose to overcome them.
- What are the proposed property goals and objectives?
- What is the tenant approach – how do they communicate with prospective tenants and address their needs?
Once the selection has occurred it is imperative for the commercial real estate professional to continue to maintain the broker/agent relationship. Highly experienced third party commercial property management companies can provide leasing agent coordination and oversight as the business interface between agent and owner. Jerry Jacquet, a Principal at Meissner Jacquet Commercial Real Estate Services, imparts that “given the extensive time and specialized local knowledge inherent in marketing vacant space, many owners turn to Meissner Jacquet to assist in the selection and oversight of a broker / leasing agent that is specifically suited for a particular assignment, as we have experience in retaining the most knowledgeable and successful third party leasing and sales teams due to our extensive broker relationships.”
No matter how the relationship is structured, the interactions with the broker / leasing agent should establish that the financial impact of the proposed transaction is of upmost importance to ownership and further significantly affects the tenant(s). Frequent interaction allows ownership to stay apprised of current market lease rates and how proposed tenants’ sales volume and space needs will affect the subject property.
Sources:
Meissner Jacquet Commercial Real Estate Services
SIOR