The Ultimate Guide to Hiring a Tenant Representation Broker

Before we get started, it’s important to understand whether or not hiring a tenant representation broker is right for you and your company.

You might be interested in hiring a broker if you are a business or retailer:

• That is looking for new office, retail, or industrial space
• With an upcoming lease expiration
• Whose current office no longer meets your needs (maybe is too big or too small)
• That is feeling overwhelmed by the process of finding office space or (re)negotiating your lease

Nearly every business can benefit from using the services of a tenant representation broker.

Companies that use tenant rep brokers can be:

• Small or large
• Local, regional, national, or international
• Retailers, restaurants, warehouses, manufacturers, distributors, or office users
• Private, public, government, or non-profit organizations
• From any industry – from technology to professional services, healthcare to logistics

What Is a Tenant Representation Broker?

Tenant representation brokers represent businesses in commercial real estate transactions. 

They are also sometimes called “tenant advisory” or “corporate services” representatives, but you will most often hear them referred to as “tenant reps.” 

A tenant rep is there to assist companies and organizations throughout the entire leasing process, from the initial needs assessment and site selection to occupancy, lease expiration, and beyond.

Think of a tenant rep as your own personal assistant whose goal is to help your company find the best office space possible with the least impact on your bottom line. 

Finding the right real estate solution truly is a full-time job, and a tenant rep will run the process for you, presenting you with the best options to fit your company, while you focus on what matters most to you – your business.

What Does a Tenant Representation Broker Do?

A tenant representation broker helps facilitate the leasing transaction between a tenant and a landlord. 

Rather than going through the process alone, a company can hire a broker to represent them throughout the entire leasing process. 

Here are a few key things a tenant representation broker can help you with:

• Deciding whether to relocate versus renew your current lease
• Finding the right space for your needs
• Negotiating your lease
• Answering questions during your lease
• Helping sublease all or part of your space
• Selling or purchasing space

It’s important to also know what a tenant rep does not do. A tenant representation broker does not: 

• Make decisions on behalf of your company 
• Replace your lawyer when it comes to reviewing your lease
• Work for building owners

There are several other things besides finding and leasing space a tenant rep broker can help you with. Some of these include: 

Finding More Employee Parking

Responding to a Change in Ownership

Managing Expansion & Growth

Subleasing Unused Space

Creating Renewal Leverage Early

Preparing for Arbitration with Your Landlord

Deciding to Lease or Purchase

Referring Reputable Vendors

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Read the full article: What Is a Tenant Representation Broker & What Do They Do?

When you use a tenant representation broker you are basically outsourcing your real estate. But you still might be thinking “I could just do this myself.”

Why You Should Hire a Tenant Representation Broker Versus Doing It Yourself?

There are numerous other benefits of hiring a tenant representation broker besides just having someone take it off your plate. The three most common reasons our clients say they hired a tenant rep broker are:

1. They Will Help You Understand Your Needs (Now and in the Future)

Often, companies are looking for new space when their current space no longer fits their needs.

It is important to begin the site selection process with a needs assessment. Does your vision match up with what you need? A tenant rep broker will ask you the necessary questions and run the preliminary analysis to help you determine exactly what you need in your new office space, factoring in, of course, your desired budget.

A tenant rep broker can help you plan for the future — they will take into account how much space you need now and how to manage your projected growth.

2. They Will Give you Access to More Options

If you are trying to find space on your own, it can be difficult to get the full picture of what’s available. A tenant rep broker will be able to identify more options than you could on your own – and with much less time and effort.

A tenant rep broker has numerous resources to find the most inclusive list of real estate options on the market, such as:

• Complete Listings: Commercial real estate brokers have access to the most complete listing databases like Costar, essentially the MLS of commercial real estate.
• Industry Relationships: Tenant reps have professional relationships with both leasing brokers and landlords, which allows them to easily get updated information on what’s available now.
• Off-Market Options: Through their industry connections, tenant rep brokers may also have information on spaces that are not on the market yet, as well as companies that are attempting to sublease some or all of their space.

They will also take the time to cull through the list and present to you the options that best suit your needs.

3. They Will Help Negotiate Your Deal Terms

Going into the lease negotiation process alone can be overwhelming and incredibly challenging. This is where hiring a tenant rep broker can save you a lot of headaches and money.

A tenant rep adds value to the negotiation process by knowing what economic and non-economic factors are common in the market, as well as walking you through the negotiation process and explaining things to you along the way.

By hiring a tenant rep, you can help your company get the best lease terms possible without the stress of worrying about whether you are doing everything correctly.

Read the full article: 7 Benefits of Hiring a Tenant Representation Broker

Would you write your will without the help of a lawyer? Invest millions of dollars without the help of a financial advisor? That is essentially what you’re doing when you choose to not use a tenant representation broker on your real estate transaction.

But what if I already have a renewal option in my lease?

Even if you have a renewal option in your existing lease, it is wise to go through the entire process to secure the most favorable economics.

A lease renewal very rarely gets executed exactly per the language in a tenant’s existing lease. Including a renewal option in a lease is always good to have in place as a safety net, but, in practice, almost all renewals are negotiated similarly to the way a new deal would be.

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Oftentimes, landlords will not give concessions if they are certain the tenant will stay. So, in order to get the best transaction, we have found that tenants should treat the renewal process the same way as if they were planning to move. This means actually going through the site selection process, even if you don’t think you intend to relocate.

Taylor McHargue
The Biggest Risk When Not Hiring a Tenant Rep Broker for Your Lease Renewal

Whether you are looking for new office space, or planning to renew at your current space, you should follow the same process on the front end. 

This means actually going through the site selection process, even if you don’t think you intend to relocate.  

Your tenant representation broker will attempt to find an attractive alternative so that you become indifferent to staying or leaving, thus creating leverage for negotiations.

Your landlord may be more likely to give you concessions in an effort to keep you if they think there is a likelihood you will vacate at the end of your lease.

Read the full article: 3 Reasons to Use a Tenant Representation Broker for Your Lease Renewal

You should begin the process of looking for a tenant rep broker early enough that you have enough time to properly vet multiple brokers and firms and make a selection in time to go through a comprehensive site selection and negotiation process.

You should plan ahead so you have enough time to:

• Identify multiple options
• Create a competitive environment by leveraging landlords against one another
• Negotiate the various deal points and legalese within the lease document
• Have plenty of time to complete construction or build out of the space and move in

If you don’t allow enough time for each of these steps, you could lose leverage and be forced to make decisions without fully vetting each option, ultimately resulting in financial loss or business interruption.

Typical renewal/search timelines based on tenant square footage are:

Good news! Typically, you (as the tenant) do not have to pay the tenant rep broker anything out of your own pocket.

(There are exceptions to this, but they are rare.)

Tenant representation brokers are paid a fee, often called a commission, by the landlord upon the completion of a transaction. This commission varies based on the type of space you’re leasing and the type of lease you’re working on (i.e. new, renewal, or expansion). 

For a full explanation of how a tenant rep broker’s commission is calculated, read this article or watch the video below.

Now that you understand why you need one and how much it will cost, how do you go about hiring the best tenant rep broker for your company? 

In order to make the broker selection process easier, we’ve outlined the key questions you must ask a tenant rep broker during the interview process.

1. Does the broker work for a reputable firm?

Making sure your tenant representation broker works for a reputable firm is important. Reputation and resources are key components to hiring a reputable broker.

Reputation

Client testimonials and references can be key to understanding if a firm just presents well, or if they truly have the sophistication and ethical standards to get you the best results possible.

Resources

Additionally, you should ensure your broker has the resources needed to handle your project, including: 

• Listing Sites 
• Mapping Software
• Market Research Department

In most markets, you will run into both national powerhouses and local experts. To help navigate which is best for you, we’ve put together this article highlighting the pros and cons of each type of firm.

2. Has my broker made reputable and trustworthy deals in the past?

It is equally, if not more important, to make sure that the specific broker within the firm you are considering has pleased clients in the past and has a sufficient amount of experience.

Your broker’s reputation within the industry can materially affect how landlords and listing brokers treat your prospective tenancy. Tenants whose broker’s had positive interactions with other industry professionals can reap the benefits of accumulated goodwill, while tenants whose brokers had less than pleasant experiences with other industry professionals may have to deal with unwanted and undeserved consequences.

Your broker should be able to provide you with a number of testimonials and references from satisfied clients, and those clients should be able to confirm their satisfaction from working with the broker.

3. How much experience does my broker have?

This does not necessarily mean how long a broker has been in the real estate industry. Instead, you should ask questions about how well they know the local market and the kind of property you’re looking for.

4. Does my broker specialize in my industry?

When looking for a tenant rep broker, you want to make sure your broker not only specializes in tenant representation but understands your property type and industry.

Because of the variety of commercial lease structures and elements of commercial leases, it is important to find a broker with experience dealing with your specific needs. In addition, the office market, industrial market, and retail market all have their own industry trends and networks, which a property-type specialist will understand.

Additionally, you’ll want to make sure your broker understands the specific needs of your industry. From law firms to tech start-ups, call centers to distribution centers, each type of business has it’s own unique requirements for space. Be it high parking ratios and the ability for high-density office space or the need for substantial tenant improvement requirements for luxurious common spaces, a broker who has worked with similar companies or firms will likely already be aware of these needs, and may even make a few recommendations based on what they’ve learned from these past transactions.

5. Does my brokerage firm offer additional services and assistance throughout the process?

Finding the right space for your company is only the start of your commercial real estate journey. Your broker should be able to assist you with finding the right consultants and contractors for personalizing your workplace strategy, IT infrastructure, and furniture selection, and oftentimes can also offer you important business insight from past deals. Furthermore, in the future you can reach out to this broker should you need to expand, renew or relocate.

In addition to the services your broker can provide, your broker should be able to provide you with recommendations for a project manager (a must-have if your new space requires renovations of any sort). Most full-service commercial real estate firms have project management teams that can (and should) be brought in during the site selection process.

We explain the benefits to be had by engaging a full-service firm in our article 5 Reasons to Hire a Tenant Rep Broker From a Full-Service Firm.

Do you work for a government, education, or non-profit entity or organization?

If so, you may be required to undergo a formal bid process, known as a Request for Proposals (“RFP”) or Request for Qualification (“RFQ”), in order to select an approved vendor or vendors for your commercial real estate needs. 

Read our article How to Write a Request for Proposal (RFP) to Hire a Real Estate Broker to learn more about this process. 

See How AQUILA Has Helped Other Businesses Just Like Yours.

BancVue’s New Office: Relocating a Large Tenant in a Small Time Frame

Becoming Coterminous: How Healthtronics Consolidated Multiple Leases to Gain Leverage

C3 Presents: Negotiating Equity in an Eastside Office Development

Data Foundry’s New Digs: An Austin Company’s Relocation to Rollingwood Center

Finding WeWork an Urban Vibe With a Suburban Address

Goodwill’s Great Deal: The Story of the Non-Profit’s North Austin Outlet

How AQUILA Leveraged Other Offers to Negotiate a Renewal for Getagadget

How Capital Factory Leveraged Its Lease Renewal to Increase Presence and Meet Market Demands

Leasing for LatinWorks: Enhancing Identity and Maintaining Culture for One of Austin’s Biggest Brands

Main Street Hub’s Headquarters: Preleasing an East Side Property for Consolidation and Growth

NDVH: A New National Headquarters for a Notable Nonprofit

Relocation Rescue: How AQUILA Managed a Complicated Relocation for Snow Software

The Story of Main Street Hub’s Ever Multiplying Real Estate Needs

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