Conference Season

It’s October! I love this time of year - the weather cools, leaves crunch underfoot, pumpkins abound and for many of us in the commercial real estate trade - it’s conference season! I’ve often wondered why all of us flock to this month in particular. After all there are only four meeting weeks. But maybe it’s because the year is far enough gone to think about 2023 and we’ve not entered the crash of holiday festivities. Challenging, however is scheduling lest you are traveling the entire month. This year, I chose two - SIOR Create 360 and MassimoCon. I’m penning this from SIOR in the Big D - AKA Dallas - Fort Worth. Yesterday was a glorious fall day with early morning gems in the thirties but quickly warming to the mid sixties. Akin to a desert winter day - you just feel alive.
 
As I’ve attended sessions, my Remarkable is close by for copious note taking. Educational is the goal of this column as I review what the best in our industry have to proffer.
 
Technology and Innovation committee. When my career started in 1984, the only technology we enjoyed was a switchboard with multiple lines. Hand written notes were taken when a caller failed to connect. That’s right. No voicemail. Bliss! PCs on every desk was a distant dream of Silicon Valley visionaries named Jobs and Gates. And the business was much more local. It had to be because tracking markets was left to each of us individually. Nowadays, with a stroke of a keyboard I can search properties globally and communicate virtually. George Jetson indeed. All we need is a flying car and a dog named Astro! Will we see a time when tenant searches are fulfilled via the meta verse? By that I mean you receive a link and through your virtual headset you’re able to walk the spaces, ask questions, see the neighborhood and transact with your avatar. Think I’m crazy? Well, you can try on clothes virtually. So, it’s not that far fetched.
 
General sentiment around is we’re headed for a rough patch with finicky capital, rising cap rates, and the rising cost of borrowing. As I preached here in this space - tenant demand is still strong and vacancy scant.
 
America’s Team. I can now say I caught a pass from Roger Staubach - legendary quarterback of the Dallas Cowboys and even legendarier commercial real estate visionary. Roger’s key to success was hard work. I’m surprised he didn’t mention the fact he created the tenant rep concept! Humble as always. At almost 80 years young he still sports - sorry - an upbeat attitude and uncanny ability to fire a spiral. Fortunately, the one I cradled was more of a lateral so I didn’t fumble it. Mark Whicker would’ve approved.
 
That’s all from Big D! Buchanan out.
 
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. His website is allencbuchanan.blogspot.com.

What is a Tenant Rep Broker?

A commercial real estate professional’s work is generally divided between agency assignments - listings - wherein an owner is represented or tenant or buyer representations. In the former - an agency - needed is a buyer or tenant for a vacant building. So, we are hired to locate an occupant. The latter? Yep. We are engaged to source a spot for a buyer to by or a tenant to lease.

Today, I delve into the world of buyer and tenant representation also know as Tenant Rep. By the way - this genre of commercial real estate practice evolved in the mid eighties. Largely responsible was the legendary Dallas Cowboy quarterback Roger Staubach. Prior to that time most of us were generalists and even today most of us work both sides of the fence - owners and occupants.

When do you require a Tenant Rep Broker? Most typically a need arises. Such as - the current physical plant can no longer house the operation or the opposite - swimming in excess square footage is the company. A lease expiration portends a requirement as one of three decisions must be made - stay and extend the term, move, or stay month-to-month. Mergers and acquisitions can create a Brady Bunch of facilities with a consolidation warranted. Opening a location in a new market creates a search criteria. Sure. You could attempt to navigate the waters without help - but you recall what someone once said about the person who represents himself.

What is typical? Standard among most practitioners in this space is an engagement agreement whereby you - the occupant - “hire” the broker to conduct a search and market your requirement. Included in this marketing is a notification sent to cooperating professionals, solicitation of owners with buildings meeting the criteria, and a vetting of potential buildings submitted for consideration.

Who pays? The cool thing about engaging a Tenant Rep is the owner of the building pays him. You may be thinking - I know I must somehow pay more. In actuality, you don’t. Most market lease rates and sales prices contemplate a broker fee. If you forego representation - you pay more because you lose the benefit of her market knowledge - which leads to more favorable rates and terms.

Are other services included? In some instances - yes! Many Tenant Rep outfits employ project managers, space planners, architects, and move advisors. All are included with no cost to you.

How does the process work? Steps may vary. But generally - you engage the professional, your requirement is clearly defined, marketing collateral is created, your requirement is published to the brokerage community, submittals are received and vetted, buildings are previewed, alternatives are toured, requests for proposals are submitted, proposals are received and compared, negotiations commence, negotiations are finalized, a lease or purchase agreement is signed, the deal is closed, improvements to the space - if any - are completed, you move in. Whew! Now you understand why you shouldn’t try this untethered. It’s a complicated process with many steps.