This guide will explain everything you need to know before hiring a leasing team for your company — from understanding what a landlord broker does and how much they cost, to the benefits of using one and what questions to ask a prospective broker before hiring their firm.
Before we dive in, you need to make sure hiring a project leasing broker is right for you.
A commercial leasing team can be beneficial to anyone who:
It can also make sense to engage with a local leasing team before purchasing a property or development in an unfamiliar market.
A commercial leasing broker, sometimes called a project leasing broker, landlord broker, or agency broker, represents the owner or landlord of a commercial property in a real estate transaction.
A leasing broker will market your property for lease and negotiate terms with tenants in order to help you attain the most favorable terms.
The responsibilities of a project leasing broker include:
A landlord broker will help you understand the market, the competitive landscape, and tenant demand. They can also advise you on how to best position your property for success and lead marketing and lease negotiation efforts.
A landlord broker will help you position your property to make it as attractive as possible to prospective tenants. To do this, they will use a combination of property marketing and market research – which we go into detail about in the next chapter.
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During the initial stage of the leasing process, a tenant rep broker will submit a request for proposal (RFP) on behalf of their client. In this RFP they will ask you, the landlord, to outline lease terms you are willing to offer in a proposal.
The initial proposal will not bind either party. It will address the details of a potential lease such as timing, rental rate, tenant improvement amount, etc. Your broker’s goal is to negotiate the most favorable terms for you while minimizing potential risk.
Note: While a savvy broker can help you negotiate these deal points, their advice should never replace that of a lawyer. We always recommend having a real estate attorney advise you on any legal documents.
Are you a commercial real estate investor evaluating potential acquisition opportunities? A landlord broker can help you underwrite properties that are for sale or off-market.
An experienced landlord broker will have access to proprietary information as well as prior and current lease rates. This can help provide a holistic evaluation of the property to make the most informed decisions possible.
Commercial real estate markets can change in an instant. Hiring an experienced broker to help with underwriting can ensure the accuracy of current rates and future trends.
We recommend engaging a local project leasing broker before you purchase a property. A local broker can help you make sure that you are making the most beneficial commercial real estate investment decision.
Read More: A Complete Guide to Common Commercial Real Estate Underwriting Terms & Definitions
Landlord brokers can also qualify tenants by examining their credit and financial history.
Making sure potential tenants are reputable and creditworthy minimizes the risk for you. A landlord broker can assess a tenant’s past financials, credit, and leasing history. This helps them make a recommendation on whether the tenant has a good reputation or is likely to break a lease agreement.
Are you planning a development? A landlord broker can help you position your property in the market to attract certain desirable tenants or industries. This can often result in higher rental rates.
Deciding whether to build spec or pre-lease is a crucial decision that can affect rental rates, vacancy rates, types of tenants, and much more. A broker can come up with a strategy that best fits your development.
Read the full article here: What Does a Project Leasing Broker Do?
A commercial leasing team will help you get more favorable rates and terms when leasing your property than if you try to handle it in-house. But, they can also help you with any problems that arise when leasing a property
If a project leasing broker has been active in a market for a while, they have likely built relationships with other brokers in the area. These relationships can help you identify which tenants are in the market and whether your space can fit their needs.
If you are having trouble identifying potential tenants, hiring a landlord broker could be your best option. Leasing teams are in constant communication with other brokers daily so they know what other teams are working on and who they are working with. They can even suggest your property to tenant rep brokers who are searching for the right space for their clients. They also know what motivates different types of tenants and brokers as well as their unique communication styles. Ultimately, they are well-connected and know how to attract attention to your property.
It’s important to list available commercial space on major listing websites to advertise that it is available. By making the information public, you can generate as much demand as possible from potential tenants.
But, listing sites for commercial real estate (CoStar, Loopnet, etc.) can cost thousands of dollars per month for an account. This can make it unlikely that a landlord will be able to post available spaces on their own.
Landlord brokers will almost always have access to these sites. This means they can list your space for you. This ensures your space is being seen by as many eyes as possible, which can lead to a quicker lease for your space.
It takes a lot more than listing a space on a website to generate enough interest. But, most landlords do not have the time or the skill necessary for creating flyers, floorplans, websites, email campaigns, etc.
That is where a landlord broker comes in.
A landlord broker will create a strategic marketing plan based on your building’s market position. They will also determine how to compete with other comparable properties in the market. This marketing plan should also identify which potential tenants would be a good fit.
In addition to this marketing plan, a commercial leasing firm should have an in-house marketing team. This team will put together essential marketing materials to help gain more exposure.
Your brokerage firm should provide:
There are also several advanced marketing techniques that your broker may recommend for your property. These can include a property website, branding, advertising, events, video, 360 video tours, and more.
Read More: How Much Does It Cost to Market a Commercial Property?
Your landlord broker will analyze the changing market conditions to make sure your property is in a competitive position.
To do this, they will analyze comparable leases in competitive buildings to establish the position of your building. They will also take future deliveries into account. These will include both new developments and upcoming availability coming online in the area. They will also consider potential zoning changes and analyze how these changes may affect the property in the future.
Your landlord broker will use this data in negotiations as leverage. This will allow them to reach the most favorable terms, so it’s important that you have high-quality information and data.
A project leasing broker’s access to data also gives them leverage. This information includes an understanding of how other buildings in the market are performing and a knowledge of what rate leases are being signed at. Having access to this information helps your broker in the negotiation process.
While you may be able to create similar leverage on your own, having a project leasing broker on the team can give you a distinct advantage.
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Many problems that you will face when leasing a property on your own come down to not having enough time to devote to the property. Unless your full-time job is managing and leasing your property, chances are that other activities demand your time. This will interfere with taking calls from potential tenants, touring available spaces, and more.
Hiring a project leasing broker can take all those activities off of your hands, leaving you free to devote time to other activities. This means you won’t have to worry about the leasing of your building being a time-consuming process.
Some situations may call for you to consider hiring a new leasing team. Whether you have purchased a new property or are evaluating your current leasing team, there are a few signs you should look out for.
Your team could be underperforming in several areas including:
If your leasing team is underperforming in any of these areas you should talk to them about how they can elevate their performance. If nothing changes, you might need to hire a new one.
When you’re marketing your property, people can get tired of seeing the same information and campaigns for a property over and over again. If your property leasing efforts have gotten stale, a new leasing team may be able to bring new life to your property. Fresh marketing ideas and leasing strategies can make a large impact on your marketing impact.
Do you have a leasing team that you already have a relationship with and trust? If you recently purchased a new property you will have to decide if you want to keep the current team or hire a new one. In some cases, bringing in your trusted team can make the transition much smoother. When your team knows what you need and you know what to expect, things can get put in motion very quickly – saving you time and money. But, it’s important to assess the current team’s abilities and your trusted team’s capacity before choosing to switch.
Read the full article here: Problems A Landlord Broker Can Help You Solve
Generally, there are no upfront fees to hire a leasing broker. Once you have selected a broker or firm to work with, you will negotiate brokerage fees. These fees, also known as commissions, are paid when a broker leases a space. These fees will be explained in your listing agreement – a contract between you and your leasing broker.
In Austin, the standard commission fee is 6% of the total gross rent to be collected across the life of the lease. This fee is split between the tenant rep broker (4%) and the landlord broker (2%). This is the standard, but commissions can vary based on property type and deal type. If the transaction is a direct deal (meaning the tenant does not use a tenant representation broker), the listing broker will usually receive a 4% fee and you (the property owner) will save 2%.
To learn more about how commissions are structured in Austin, Texas, read our article Cost to Hire a Commercial Project Leasing Broker.
Trying to find the right leasing team for your project can be daunting. Hiring the right team from the beginning will help you navigate the leasing process with ease as well as save you time and money.
To help you make sure you get the best leasing team, we have compiled a list of the five most important questions to ask potential teams. These will help you choose your ideal team more effectively and efficiently.
Finding a firm with a good reputation is a top priority when searching for a leasing firm.
Your leasing broker should be backed by a reputable and respected team with good relationships in the Austin market. Having an experienced broker represent your property should lift the stress off your shoulders.
There are several reputable companies that are active in the Austin market. It is worth the time to filter through each company and find the one that you feel the most comfortable with.
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Some ways you can determine the reputation of a specific company include:
Every market is different and has its own unique characteristics. That’s why it is very important that your leasing team has an extensive background in the market. With this experience, they can attract the right tenants and negotiate the best lease terms possible for your building.
Some questions an experienced leasing firm should be able to answer include:
It’s important to ensure that your broker isn’t already listing a conflicting property.
If a broker already represents a competitive property, this could represent a conflict. This is because both properties may compete for the same tenants.
But, a conflict only exists if there are competing availabilities or comparable rent rolls on the horizon. For example, if your building has 20% vacancy today, but the competitive property is fully leased for the next five years, it is unlikely to cause a conflict. In smaller markets most larger brokerage firms lease competing properties so it’s important to ask the following questions below to have full transparency.
Specific questions you should ask may include:
Different property types need different expertise to lease successfully. This is why it’s important that your broker has knowledge about your specific property type.
Leasing an office property requires a different set of skills and knowledge than leasing a retail property or industrial building.
Luckily, many firms do not focus on one property type, but rather have a mix of office, retail and industrial specialists. Typically, each broker will have a specialty. It’s important to make sure that your broker has experience working with your property type.
When considering a leasing agent you will also want to consider what other types of services you may need.
At AQUILA we have managed and leased dozens of properties… and have seen firsthand the benefits of having leasing and management handled by the same firm. Our leasing teams have also worked with other property management firms and with landlords who have their own in-house property management. While we’ve seen successful results in all these scenarios, we have heard from many owners that using integrated services that it makes their lives easier.”
Graham Moore
4 Benefits of Using the Same Real Estate Company for Leasing and Property Management
Full-service commercial real estate companies offer a wide range of services to their clients. Some of the services a full-service commercial real estate company may offer but are not limited to include:
Read the full article here: Interviewing Leasing Firms for Your Commercial Property? Questions You Must Ask
Finding the right commercial leasing firm for your property can be a challenge, especially in a competitive market like Austin. Hiring a good company from the beginning can save time, money and a lot of headache down the road. To help make this selection process easier, we have compiled 25 must-ask questions for you to reference during the interview process.
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