How Commercial Leasing Transactions Work

The landlord hires a broker most often called a listing broker. For clarification purposes let’s call him the landlord rep.

The landlord rep markets the property on behalf of the landlord seeking good tenants.

She shows the property.

She handles lease negotiations.

She gets paid a commission by the landlord when lease is signed and/or when tenant moves in.

What Does Your Tenant Rep Do?

The tenant rep is a licensed real estate broker.

He represents you the tenant.

He shows you prospective properties after understanding your particular space needs.

When you find space space that you like, he represents you in lease negotiations.

He shares part of the landlord rep’s commission when the lease is signed and/or when you move in. You, the tenant, pay nothing.

Never Sign a Commercial Lease without Tenant Representation

Here’s Why

Landlord pays a commission whether the tenant has representation or not.

Without a tenant rep, you are essentially subjugating all of your interests to the landlord.

You are pitting yourself against a professional who handles leasing transactions constantly. You probably only once every five years or so. Is this in your best interest?

If you are thinking this is like the commission structure of buying a home, you are right.

The landlord has a drawer full of tenant inducements that you are not going to see unless you ask. Free rent, build-out allowances, expansion options, and much more. Would you know what to ask for?

Rent is only one cost of occupancy. You may be responsible for lots of other expenses like Common Area Maintenance, various taxes, maintenance expense escallations. Have you figured those into your projections?

For a huge majority of transactions the tenant rep saves the tenant money, money that will go to the bottom line every month of the lease term.

Don’t go to the table without a tenant rep on your side of the table.

Here is a more in depth article on Tenant Representation.