The third most common mistake in the ITRA Global survey of “Facility Acquisition Mistakes” is Inadequate Representation. This list of common mistakes resulted from a survey taken among the members of ITRA Global. Each participant drew from an average of over 20 years of commercial real estate tenant representation experience, representing and advising national and local commercial tenants in thousands of leases totaling millions of square feet.
Unless someone in your company is already an expert in commercial real estate, most business owners cannot afford the time necessary to learn this complicated industry. Lack of knowledge combined with time pressures can cause unrepresented business owners to make location decisions without being fully informed. The result: costly errors that siphon profits and increase financial exposure.
An experienced and proficient commercial real estate tenant representative counterbalances the landlord’s real estate professionals and will ensure that the tenant receives the best possible rates, terms, incentives and lease clause protections achievable. Incredibly, this valuable service may cost the business owner nothing because the tenant representatives usually share in the leasing fees that are already being paid by the landlord to its own agents. Using the landlord’s broker or no broker at all may lead to incomplete information or conflicting loyalties because of hidden agendas or landlord relationships.
Recommendation: Use an experienced tenant representative to take advantage of a well-developed and extensive network of commercial real estate professionals. This allows your tenant representative to find facility choices that are not yet vacant or on the market – also known as the shadow market. An experienced tenant representative will negotiate on your behalf for the best possible terms. Business owners that do not use a tenant broker will likely not be aware of all potential options. In addition, business owners should keep their broker involved in any facility needs after the signing of the lease, such as expansions, contractions, renewals and extensions that occur during the tenancy. This will prevent uninformed decisions that can lead to lost opportunities. Generally at no cost, one certainly can avoid this facility acquisition mistake!
