Here is a story about how tenant representation helps business owners save money.
A few years ago, there was a business owner that knew he had to move his business due to a growing business and problems with his current location. He was in need of more office space and the warehouse he was leasing had many issues. His warehouse was dealing with leaking roofs and electricity issues. There were also developing environmental contamination issues that he didn’t want to stick around for.
The business owner never used a tenant rep in over 20 years of leasing warehouse space. This business owner was not much of an internet user so he picked up his car keys and began driving around the area to find buildings to rent.
There were many warehouses in the area that could potentially work for his business, so he began to call landlords. One building seemed to be perfect and it was also within a few miles of his current location. He left a few voicemails, but no one ever called him back.
The next best building was a little further away, but the CRE broker told him there were other offers. He was also told that he had to submit an offer right away if he wanted to be considered as a tenant.
The next two buildings were both available for a showing by their private landlords. Both of these landlords were glad to show their property to the business owner. These two landlords both asked the business owner if he had tenant representation and smiled when he said no. They also began to raise other concerns for the business owner so he asked his daughter to help him research how to lease commercial real estate.
Offers from multiple landlords
This business owner took over the family business. The one bit of advice he had from his parents was to get offers from multiple landlords if he ever had to move the business. This was the extent of the advice he had received on commercial real estate.
Before he began researching online with his daughter, the business owner decided to get offers from potential landlords.
He felt like the landlords should know what type of rent they wanted for the property. The business owner also felt a broker could perhaps use the information as well.
The responses from the landlords were:
- Building 1 (private owner, no broker, most ideal location); still didn’t respond.
- Building 2 (CRE broker, second-most ideal location); The broker said there were offers at $12.00 per sqft plus $12 Common Area Maintenance (CAM), no free rent or Tenant Improvement (TI) allowance.
- Building 3 (Private owner) $14 per sqft, $10 CAM, No free rent or TI allowance.
- Building 4 (Private owner) $13.50 per sqft, $11 CAM, No free rent, but $4,000 in TI allowance.
Consulting with Tenant Representation Helps
The daughter found a tenant representative in the local Fort Worth area that had been in business for over 25 years that would sit down with the business owner for a free consultation. The tenant representative brought many potential hidden costs of a commercial lease. The tenant rep also explained that the landlord would be paying any fees due to the rep. Therefore, the business owner considered having this professional’s help was a big win-win.
The tenant rep didn’t some research and decided to eliminate the third property from consideration for many different reasons mainly revolving around workplace safety issues. Building owner 1- the one that didn’t answer the business owner’s calls- was eager to work with the tenant rep so their offer came back $13.00 per sqft with $9 CAM, 3 months of free rent and $6,000 in TI allowances. Building owner 2 didn’t change their details for the tenant rep. The 4th building owner was willing to match lease types as well as the offer of building owner 1.
In the end, the business owner and building owner 1 came to a fair deal. The business owner also got a much more favorable lease agreement that was more tenant-friendly. They are over 5 years into the lease agreement with no major issues. The business owner also calls his daughter and CRE rep his heroes to this day.
Contact us about your CRE needs In Dallas- Fort Worth
We encourage you to contact us should you want more to learn more about how tenant representation helps or CRE services. Feel free to reach out to discuss your needs or how we can help at any time. Our team can help you lease commercial real estate anywhere.
We are always glad to discuss corporate real estate with business owners considering their options. There is also no charge or obligation when it comes to having a discussion. Call us or shoot us an email today so we discuss your needs.