The difference between one TRS and another can mean thousands if not millions of dollars spent vs. saved on operating costs for a company. In Seattle there are literally hundreds of real estate professionals that will claim they specialize in representing tenants with space acquisition and lease negotiations. If a company:
- Is in the news
- Has more than 10 people
- Occupies space in a core commercial market
– then chances are the person who makes real estate decisions for that company gets solicited about once a week (if not more) by people claiming to be a TRS. Most of the people calling claiming to be a TRS are not very good at being a TRS. So if they don’t already have a personal relationship with a TRS, how do company leaders choose one?
1. Referrals: Referral sources include: friends, employees, venture capitalists, banks, attorneys, industry affiliates, building owners, etc. Obviously if somebody trustworthy vouches for a TRS, then you would hope to get quality service. Be careful to understand why referrals are being made however. Just because somebody you know has a cousin who claims to be a TRS, doesn’t mean they are the best fit to represent your company. It is important to interview several TRS options and select the best fit early in the process.
2. Potential Conflicts: Make sure to use a TRS whose interests will always be aligned with your company. Most people claiming to be a ‘tenant’ representation specialist also represent building owners. It is a wonder that in commercial real estate brokerage, there is no law against one firm representing two opposing parties. Good law firms are overly careful to never have a conflict if interest between two clients because it is illegal. A crucial differentiator for a company hiring a TRS is whether a given TRS, or anybody in their company, represents building owners. If a self proclaimed TRS represents building owners, then they have a fiduciary responsibility to those owners to negotiate the highest rent possible for that building. How could they then turn around and negotiate the lowest possible rent for the tenant they represent? Additionally, most times the building owner will be the more lucrative client. The best TRS options will never have a potential for a conflict of interest.
3. Experience: Experience levels between TRS options will vary from 1 day to 40+ years. However, just because a TRS has been around since dinosaurs walked the earth doesn’t mean they are the best fit for a given company. It is important to use a TRS who is experienced but more importantly one that is active in the market. An active TRS will know the comps, the trends, the players, and the opportunities available to their clients. An active TRS will have represented a company who occupies or formerly occupied space in any given building. Also be careful about teams when choosing a TRS. Often times a TRS team will be comprised of a new person and an old person. Depending on the size of the requirement, often times the new person will be handling the negotiations. Make sure to understand the new person’s experience and activity level and establish who will be the main point of contact before selecting one TRS team over another. The experience level of the TRS selected should align with the complexity and size of the requirement.
4. Aggressiveness: A TRS shouldn’t ruin a relationship between tenant and landlord. However, if bottom line $ is important to a company, then the TRS hired should persistently push the envelope in negotiations. A good TRS doesn’t ‘get’ a market deal for their client; they ‘set’ a new market low. Too often people claiming to be a TRS are lazy ‘brokers’ who try to get a deal done as fast and easily as possible not ‘advocates’ willing to ask for more concession after a thorough negotiation. Also, if a TRS ‘cold-called’ you it is a pretty good indicator that they are aggressive and persistent. Make sure to hire a TRS who can efficiently close a transaction but also prides themselves in being the most aggressive and getting the best deal possible for their customer.
5. Likeability: The people making real estate decisions for a company will inevitably have to spend hours with their TRS on each requirement. A TRS might as well have a personality that gels with their clients because hopefully the TRS you select will be your TRS for life. Additionally, if a TRS is liked by their customers, they are also liked by their competitors and building owners. If a person comes off as shady in an interview, most likely the people they negotiate against will also think they are shady. If a person is ever emotional or a hot-head they will not be able to provide good service. Finally if a TRS slings mud or throws competitors under the bus, then they have insecurity problems and probably won’t have qualms gossiping about their clients to others.