Why you need a tenant rep – especially now – for your next office space

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Picking out the new office furniture, lining up the sign company, keeping the hand sanitizer full. As a business owner, you have many random tasks, and many are indeed do-it-yourself. But as well as you know your business, you also know your limitations—and when DIY is not only inefficient but potentially hazardous to your business health.

While choosing your next office space and negotiating the lease is tempting to handle yourself, the smarter choice is to seek outside help. After all, are you able to decide if that Class A space is worth the extra cost over a neighboring Class B? Should you  find an office downtown or something closer to your suburban employees? How much space do you truly need now with the changing office environment?

With so much to keep your arms around, now’s the time to work with a trusted tenant representative.

Tenant reps work for you

In simple terms, a tenant rep is a commercial real estate broker who represents you, the tenant, instead of the landlord. This person is not only responsible for helping you identify your business needs and locating options that match those needs, but also negotiating directly with the landlord on your behalf. Basically, they’re on your side as an advocate, which can be critically important, as Margarita Foster explains for LoopNet:

“A tenant representative is legally bound to safeguard the interests of the tenant. If you represent yourself, you could be at a tremendous disadvantage when working with the listing agent that represents the building landlord and has extensive experience negotiating real estate leases.”

Similar to a residential deal, a tenant rep earns their money by splitting the commission with the landlord’s agent – which means there’s no cost to you – and tenant representatives also have certain fiduciary duties established by the states that compel them to safeguard your best interests.

Budget for operating expenses

Leasing costs that often come as a surprise to tenants are operating expenses or additional rent, those out-of-pocket costs a landlord pays for maintaining a functioning building—property taxes, insurance, utilities, janitorial costs, supplies, etc. Depending on the type and structure of the lease, these costs can be charged to the tenant in addition to the base rent, based on the tenant’s pro rata share in the building.  Typically, a landlord charges these costs to the tenants of the building, based on the square footage you lease.

As you’re evaluating space options with your tenant rep, pay special attention to what’s included in your share of operating expenses and how the landlord is calculating them. Your tenant rep can advise you on where you might be able to negotiate to reduce your financial burden while still being fair to the landlord.

The important thing to remember, however, is that operating expenses can make up a significant portion of your cost, so don’t forget to include those in your budget numbers.

Benefits go beyond the obvious

A tenant rep brings their firm’s name and reputation to the table when they’re reaching out to landlords for you, automatically giving you more priority and attention than if you were making those calls yourself. That reputation – and established relationships with others around Kansas City – add additional muscle to your side of the negotiating table.

Your tenant rep can also make recommendations for other key professionals you may need, including lawyers, architects, contractors, office furniture companies and more.

Finally, your rep can continue working for you even after you occupy the space by potentially helping you resolve disputes with the landlord and serving as your intermediary.

Reimagining your office in a pandemic

Partnering with a commercial real estate expert is always a good idea, but this year is making that even more true. Businesses of all sizes through the Kansas City metro – and, indeed, around the country – are reevaluating their office footprint (as well as their geographic location) and what changes they need to make for the coming year.

A gradual workplace shift and a higher priority on flexibility has been happening for a while, but the pandemic has obviously accelerated the pace. That makes it even more difficult for business owners to determine how much space they will actually need. According to a McKinsey report, business leaders expect  in-office work time to reduce by 12% and working from home to increase to 27% of work time (and we can only assume those numbers have increased since the report was published this past summer). Tenant reps can help educate business owners on what these trends mean for them during their search, and how to get the best deal on their post-pandemic office space.

Chances are good you’re thinking through your own office space footprint and preparing your team for how that could evolve as your business – and the local market – changes through the coming year. The last thing you want to do is lock yourself into an office lease that isn’t the best solution for your team. Working with a tenant rep, however, provides you with an opportunity to negotiate various scenarios that protect your business while ensuring a certain nimbleness to allow you to pivot as needed.

Regardless of what the coming year brings, protect your company and business future by working with an experienced tenant rep, someone who can provide you with a more focused, more detailed and more sophisticated approach to corporate real estate property analysis and brokerage services.

“Do-it-yourself” is fine, but something as important as your next office home calls for “doing it together.”

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