Tenant Representation: A Serious Hiring Decision
Most companies and organizations undergo a thorough process for selecting an employee. Whether for the position of Chief Financial Officer or Receptionist, a carefully designed evaluation is conducted. Hire slowly and fire quickly, as the saying goes. So why should the decision to hire a tenant representative to manage a process encompassing your second largest expense be any different? As this article will demonstrate, now is not the time to hire your golfing buddy.
You get what you pay for
As the adage goes, selecting the real estate firm that offers you a discount or return of their market fee can quickly become an expensive proposition. Prevailing market fees exist at their levels for a reason, and while the real estate team may use the right terminology and propose nice sounding services to check your internal boxes for a project, the real estate team may hesitate to utilize their internal services—particularly if they’re required to pay their company for them—if they feel like they bought the project. As the project takes unexpected turns, as it inevitably will in this economic and fiscal environment, the discount real estate team may decide privately not to continue to put good time after bad money. When this happens, you will have lost valuable time and money through lost negotiation leverage, poor information and substandard service.
You get the commitment you commit to
A variation on the colloquialism also holds true for tenant representation. Hiring a real estate broker that someone on your team or board of directors knows without a real tenant representation agreement in place does not compel that real estate broker to follow a thoughtful tenant representation process; rather, it encourages the broker to merely register himself for a commission first, then go through the motions on the requirement thereafter. Conversely, when a commitment is made to the right tenant representation team, you can enjoy efficiency studies, expense and tax pass-through reimbursements and thorough analysis & negotiation, because the tenant representative knows that their work will be compensated fairly.
While it’s easier to treat real estate and the hiring of a tenant representative to manage your real estate as another task to be checked off, more strategic companies and organizations take the risk and cost seriously by hiring the right tenant representative as they would hire a staff member. The lure of the path of least resistance is strong, but hiring quality tenant representation will be worth the effort for your company or organization.