This comprehensive guide provides essential insights for businesses seeking to hire a leasing team. It covers key aspects such as the role and fees for landlord brokers, the advantages of their services, and crucial inquiries to make when evaluating prospective brokers for your organization.
Prior to proceeding, it is crucial to assess whether engaging a project leasing broker aligns with your objectives. The services of a commercial leasing team can be beneficial to:
Furthermore, it is advisable to consider involving a local leasing team when contemplating property acquisition or development in an unfamiliar market.
A commercial leasing broker, also known as a project leasing broker, landlord broker, or agency broker, serves as the representative for the owner or landlord in commercial property transactions.
Their role entails marketing the property for lease and skillfully negotiating terms with tenants to secure advantageous agreements.
The responsibilities of a project leasing broker include:
A landlord broker provides valuable insights into the market, competitive dynamics, and tenant demand. They offer expert guidance on optimizing your property’s positioning for success and spearhead effective marketing strategies and lease negotiation endeavors.
A landlord broker facilitates the strategic positioning of your property to enhance its appeal to potential tenants. They employ a blend of property marketing and comprehensive market research.
During the leasing process’s initial stage, a tenant representative broker will submit a Request for Proposal (RFP) on behalf of their client. The RFP seeks input from you, as the landlord, regarding proposed lease terms.
It is important to note that the initial proposal does not legally bind either party. It serves as a platform to discuss potential lease details, including timing, rental rate, tenant improvement amount, and more. Your broker’s objective is to negotiate favorable terms on your behalf while minimizing associated risks.
Please be aware that while a skilled broker can assist in negotiating these terms, their guidance should not substitute the advice of a legal professional. We strongly recommend engaging a real estate attorney to provide legal counsel regarding any contractual documents.
If you’re a commercial real estate investor assessing potential acquisitions, engaging a landlord broker can prove invaluable. They possess the expertise to analyze both on-market and off-market properties.
An adept landlord broker possesses access to proprietary data, including historical and current lease rates. This enables a comprehensive evaluation of the property, empowering you to make well-informed decisions.
Given the dynamic nature of commercial real estate markets, enlisting the services of an experienced broker for underwriting guarantees an accurate assessment of prevailing rates and future trends.
Prior to property acquisition, we strongly advise enlisting the services of a local project leasing broker. Their expertise ensures your commercial real estate investment yields optimal returns and maximizes its potential value.
Read More: A Complete Guide to Common Commercial Real Estate Underwriting Terms & Definitions
Landlord brokers play a crucial role in tenant qualification, scrutinizing their credit and financial background.
By ensuring the credibility and financial stability of potential tenants, you can mitigate risks significantly. Landlord brokers evaluate tenants’ previous financial records, creditworthiness, and leasing track record. This assessment allows them to provide recommendations on the tenant’s reputation and the likelihood of adhering to lease agreements.
If you have development plans, leveraging a landlord broker’s expertise can effectively position your property in the market to attract desirable tenants or industries. This strategic approach often leads to higher rental rates.
Determining whether to pursue speculative development or pre-leasing carries significant implications for rental rates, vacancy rates, tenant profiles, and more. A skilled broker can devise a tailored strategy that optimally aligns with your development objectives.
Read the full article here: What Does a Project Leasing Broker Do?
Engaging a commercial leasing team offers the advantage of securing more favorable rates and terms compared to in-house handling. Additionally, they excel at addressing any challenges that may arise during the leasing process.
Experienced project leasing brokers possess established networks of relationships with local brokers, a valuable asset in identifying potential tenants and assessing the suitability of your space for their requirements.
When faced with challenges in tenant identification, engaging a landlord broker becomes a compelling choice. Leasing teams maintain regular and active communication with fellow brokers, granting them insights into ongoing projects and collaboration opportunities. They can recommend your property to tenant representative brokers actively seeking suitable spaces for their clients. Furthermore, they possess a deep understanding of the motivations, communication preferences, and dynamics within various tenant and broker profiles. Their extensive connections and expertise enable effective promotion of your property.
Effectively promoting available commercial space entails listing it on prominent commercial real estate websites, maximizing visibility to attract potential tenants.
However, subscribing to listing sites like CoStar and LoopNet can be prohibitively expensive, making it challenging for landlords to list spaces independently.
Fortunately, landlord brokers typically have access to these platforms. By leveraging their access, they can list your space on your behalf. This ensures maximum exposure and increases the likelihood of securing a lease promptly.
Generating sufficient interest in a property requires more than simply listing it on a website. However, many landlords lack the time and expertise to handle tasks like designing flyers, creating floor plans, developing websites, and executing email campaigns.
This is where a landlord broker proves invaluable.
A landlord broker develops a strategic marketing plan tailored to your building’s market position, allowing you to effectively compete with comparable properties. This plan identifies potential tenants that align well with your property, ensuring a targeted marketing approach.
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.
Your landlord broker plays a crucial role in ensuring your property maintains a competitive position by analyzing dynamic market conditions.
To accomplish this, they meticulously examine comparable leases in competing buildings to determine your property’s positioning. They also consider forthcoming developments and upcoming availability in the area. Furthermore, potential zoning changes are taken into account, with a thorough analysis of their potential impact on your property in the future.
Armed with this valuable data, your landlord broker leverages it during negotiations to secure the most advantageous terms. Thus, it is imperative to possess reliable, high-quality information and data for effective decision-making.
The data access of a project leasing broker provides them with a valuable leverage advantage. They possess insights into the performance of other buildings in the market and are knowledgeable about prevailing lease rates. This information significantly aids them during negotiations.
While it is possible to independently gather similar leverage, having a project leasing broker on your team grants you a distinct advantage.
The challenges of leasing a property independently often stem from a lack of dedicated time. Unless property management and leasing are your sole focus, other commitments tend to compete for your attention. Consequently, this can hinder your ability to handle tenant inquiries, conduct property tours, and more.
Engaging a project leasing broker removes these responsibilities from your plate, allowing you to allocate time to other endeavors. By doing so, you can alleviate concerns about the leasing process becoming excessively time-consuming.
Leasing brokers typically do not require upfront fees when hired. Upon selecting a broker or firm, the negotiation of brokerage fees takes place. These fees, commonly referred to as commissions, are paid to the broker upon successful lease transactions. The specifics of these fees will be outlined in the listing agreement, which serves as a contractual agreement 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%.
Typically, the landlord pays all leasing fees and commissions. There are exceptions to this, but these are very rare.
To learn more about how commissions are structured in Austin, Texas, read our article Cost to Hire a Commercial Project Leasing Broker.
Selecting the ideal leasing team for your project can be a challenging task. Engaging the right team from the start will facilitate a smooth leasing process while saving valuable time and resources.
To assist you in selecting the best leasing team, we have curated a list of five essential questions to ask potential teams. These questions will enable you to make a more effective and efficient decision in choosing your ideal team.
When seeking a leasing firm, prioritizing a strong reputation is essential.
Ensure that your leasing broker is supported by a reputable and well-regarded team with established relationships in the Austin market. Having an experienced broker handling your property alleviates the associated burdens.
Numerous reputable companies operate within the Austin market. It is worthwhile to invest time in evaluating each company, selecting the one that instills the greatest sense of confidence and comfort.
Read Now: The Best Commercial Project Leasing Firms in Austin, Texas
Some ways you can determine the reputation of a specific company include:
Market knowledge is a crucial asset for your leasing team.
The success of attracting suitable tenants and securing favorable lease terms hinges on their comprehensive understanding of the specific market dynamics and nuances. Therefore, it is vital to engage a leasing team with extensive experience in the market.
Some questions an experienced leasing firm should be able to answer include:
Ensuring your broker avoids conflicts of interest is paramount.
A potential conflict arises when the broker represents a competing property, as both properties may vie for the same tenants. However, conflicts only arise when there are competing availabilities or comparable rent rolls in the near future.
For instance, if your building currently has a 20% vacancy while the competitive property is fully leased for the next five years, the conflict is unlikely. In smaller markets, larger brokerage firms often lease competing properties.
To ensure transparency, consider asking the following questions:
Specialized expertise is crucial for successful leasing, as different property types demand specific knowledge and skills.
Leasing an office property, for example, requires a distinct expertise compared to leasing a retail or industrial property.
Fortunately, many firms have a diverse mix of specialists covering office, retail, and industrial properties. Each broker usually specializes in a particular property type. It is essential to ensure that your broker possesses relevant experience and a track record in leasing properties similar to yours.
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
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:
Have a question? Ready to chat about your commercial real estate needs? Reach out below.
