So many companies in major metropolitan cities have great leaders. These leaders are highly educated professional business people and often times great negotiators. So why would CEO’s, Managing Partners, General Managers, etc. of companies who employ 10-100,000 people use somebody else to negotiate their office lease? Why do Microsoft, Amazon, Perkins Coie, Morgan Stanley, Smith Barney, NBBJ, Nordstrom, Starbucks and virtually every major corporation in thePuget Sound region use an outside advisor to help acquire real estate and space?
The answers to the previous questions can be summed up in two words: Time and Leverage.
Time – Leaders of great corporations save time when they hire a Tenant Representation Specialist (TRS) to secure and negotiate for space. A good and local TRS is already educated on the conditions of the market and can sum it up in a few sentences. A quality TRS can quickly offer information on availabilities and opportunities for the company they are representing. An experienced TRS knows behaviors of building owners and the market standards for lease terms and concessions that can be accomplished. A TRS can refer good architects, designers, contractors, furniture vendors, moving vendors and data/cabling vendors. By using a TRS, leaders of great companies can go back to doing what they do best – run their company. Great leaders delegate and a TRS is just another short cut that leaders use to create more efficiency.
Leverage – Tenant Representation Specialists create leverage in negotiations, which saves money for the company they represent. The reason there is a market for a TRS to be employed is because they save more for their clients than they cost – by creating leverage. A TRS creates leverage in three ways: Perception, Competition, and Delivery.
- Perception: A majority of companies don’t want to go through the disruption of a move unless they have to. A majority of companies will renew their lease. Building owners know this. By hiring a TRS, leaders of companies increase credibility in negotiations with building owners because there is a perception that they might relocate. When a TRS is involved, building owners will have the perception that a company is educated on the market rents and concessions.
- Competition: A TRS provides leverage by creating a competitive environment. Building owners will never give a company the bottom line economics until the building owner knows they have competition. A good TRS will put their clients in a position to have one foot out of the door before final terms are reached. A credible TRS will have moved a company out of your building before.
- Delivery: A TRS delivers the same messages to building owners every day for a living. A TRS helps their clients to understand the cost differentials between options so they can clearly deliver the message for why their clients deserve lower rent and more concession. A credible TRS will also have moved a company into your building before, so the owner knows they can potentially deliver.
Ultimately a confident TRS will provide a service guarantee. My representation agreements with my clients have a clause stating: ‘If for any reason the client is not satisfied with my service that they can terminate our agreement at any time by providing notice with no penalty.’ My clients have the control to literally fire me the second before legally binding documents are fully executed, even if I have spent hundreds of hours on their project. A good TRS won’t take an assignment if they can’t provide value for their customer and shouldn’t be paid if they don’t provide value.