When you look to renegotiate your current lease or secure a new lease, you may come across both tenant advisors and landlord agents offering lease negotiation services. Let’s start by clarifying what each of these are and the roles they play:
Landlord agent: A landlord agent is a real estate agent that represents a landlord. When you enquire directly on an advertised office space, it is typically the landlord agent with whom you speak. They can also introduce you to other spaces owned by other landlords that they represent, but they do not represent you as a tenant.
Tenant advisor or representative: A commercial tenant advisor or representative advises and negotiates on behalf of a tenant during negotiations with an existing landlord or potential new landlord (or their representing landlord agent).
Some tenants decide to work directly with landlord agents, without the use of a tenant representative, researching and finding their own space and then negotiating a commercial lease or commercial lease renewal with the landlord agent directly.
In some circumstances, like a straightforward and uncomplicated commercial lease renewal, this is pretty easy to do and has the added benefit of saving you from having to pay an additional fee to use a tenant representative.
In other cases, however, having a tenant advisor on your side comes with some worthwhile advantages, including saving you time, ensuring you get the best commercial terms possible – saving you considerable money in the long term, and providing access to spaces that may not yet be on the market (due to their market knowledge and network).
Your representative will start by matching your company’s business objectives to options on the market. They will consider things like your need for flexibility or your business’s expected growth rate.
Next, you will receive a shortlist of options that match your requirements. This list could also include off-market options thanks to your tenant representative’s industry contacts. Once you’re ready, the tenant advisor will be by your side throughout the process of inspection, offer and negotiation of a deal.
Even if you’re not moving office spaces, and you’re just renewing your current lease, a tenant representative can be brought on in a smaller capacity to help you negotiate a new, more favourable deal with your landlord, and save you from tricky or uncomfortable conversations with your landlord.
6 benefits of working with a tenant advisor
1. An expert in your corner
With most commercial leases lasting between three to five years, it’s unlikely in-house real estate expertise exists within your company. And with leases being such a significant transaction, running easily into the millions of dollars over the lifetime of the contract, it makes sense that you would want an expert on board. A tenant representative has years of specific experience in their field, making them a valuable asset when it comes to ensuring your lease is ‘right-size’ and the best deal available.
2. Professional lease advice on what is appropriate for your needs
A tenant representative will work with you on matching your business objectives to different options on the market. For example, if you are looking to attract and retain talent, you may need to find a location near public transport, with good amenities and in a character building. As an expert in this area, your advisor can objectively view your requirements and help you stay focused in the excitement of finding a new space, always bearing in mind your overarching company values and goals. They will also be able to advise you on what you really require, not what you think you require (i.e. you may think you need more space than you really need).
3. Access to more commercial properties and a network of contacts
Thanks to a great real estate network and years working in the business, tenant representatives have unique access to properties. Some of these options may not even be listed publicly. An advisor might be able to work out creative options for you as well. For example, they may know of a tenant that is outgrowing their space but still have three years left on their lease. In this case, they might be able to coordinate an office shuffle in which they help relocate the other tenant to free up this office space (and then have it subleased by you).
4. Save time and keep your focus on core business work
You have a job to do and it probably isn’t just office relocation or tenancy. With leases only coming up every few years, it’s unlikely there are dedicated resources for this within your company; rather, there are business-as-usual tasks to complete and core business work to be done. By working with a tenant advisor, you can save yourself both time and hassle, allowing you to get on with what boosts your business revenue.
5. Negotiating power
A landlord rarely comes forward with their best offer upfront. There is typically room to negotiate, and an experienced tenant representative has the knowledge and expertise to get you a first-rate deal. Whether it’s knocking off dollars or working out favourable incentives, rent review periods and ‘make good’ clauses, you can proceed with confidence that you signed a good deal.
6. Saving your tenant / landlord relationship
Sometimes negotiations require playing hard ball or having tricky, uncomfortable conversations in order to secure your best deal. This is a delicate dance when you are negotiating with your landlord or future landlord with whom you need a good working relationship. A tenant advisor can step in as the go-between so you can accomplish both objectives: negotiating a great deal and having a great relationship with your landlord.
Now, what is better than having a tenant advisor or representative in your corner? Having a tenant advisory team that includes a tenant representative as well as a workplace design partner. This team will give you the complete picture of both the lease contract terms and costs as well as the fitout options and costs for each office space. For example, option A may have lower rent, but when you factor in an extra $500K of fit out work, option B might actually be the more suitable and cost-effective choice.
So how do you get this power tenant advisory team in your corner? Select a workplace design partner early in your lease expiry process. Invite them along to view potential office space with you and your tenant advisor. They can give you valuable insight early on that will save you big bucks down the road.
To learn more about choosing the right workplace design partner for your strategy, download our free ebook today.
