Commercial Real Estate Tenant Representation
What is Tenant Representation?
Exclusive Tenant Representation in commercial real estate is defined as the practice of commercial real estate agents to exclusively represent a commercial tenant in a commercial lease transaction. The tenant representation broker exclusively focuses on the needs of the client without a conflict of interest. The specialization allows the tenant broker to serve their client with greater expertise and dedication.
Advantages of Tenant Representation
Tenant representation has several benefits for the company looking for new space, or looking to renegotiate an existing commercial lease. First and foremost, the tenant has someone working exclusively in the tenant's interest. A tenant rep commercial real estate agent will only negotiate on behalf of the tenant.
The second advantage is the tenant will have someone who should have a superior understanding of their business and their real estate needs. This stems from the full attention and focus the tenant receives from their tenant rep broker as well as the agent's ability to draw on their experience having served other similar tenants.
Specializing in tenant's needs also elevates the skills and expertise of the commercial real estate agent and the value they provide their client, especially if the agent is specialized in a particular tenant type or industry. An in-depth understanding of the tenant's industry improves and facilitates communication, simplifies the process for the tenant, and improves the ability of the commercial real estate agent to manage and coordinate the process.
Tenant Representation Services
Selecting A Tenant Rep Broker
It's important to select a commercial real estate firm and tenant representation broker that correspond to the tenant's specific needs. For example, large corporate tenants may need extensive expertise in multiple disciplines and resources in multiple markets. Corporate tenants may need a tenant broker who specializes in office tenant representation. Retail tenants may need the highly specialized skills of a tenant broker who specializes in retail tenant representation.
In tenant representation, the commercial real estate agent will also need to possess in-depth market knowledge to ultimately deliver for their client. The level of market expertise required will depend on the scope of the tenant's requirements. A tenant rep agent may be an expert in a given market, or extend their expertise by teaming up with commercial real estate agents in other markets.
Fortunately, there are a variety of commercial real estate firms and brokers to choose from. For tenants that require comprehensive services in multiple markets, there are companies such as CBRE and JLL that are well known in the industry. There are tenant brokers in smaller firms in local markets that also offer tenant rep services.
Commercial Tenant Representation Agreement
A commercial tenant can engage in an exclusive tenant representation agreement with a tenant broker. The tenant representation agreement provides a formal understanding that the tenant representation broker is fully focused and committed on serving the needs of their client.
Tenant Representation can be a very successful approach for both the tenant and the commercial real estate agent, particularly when the two possess the trust and mutual understanding to exclusively work together. This understanding may be confirmed by a formal agreement or an acknowledged letter.