Harvey MacKay, author of the seminal business book, “Swim with the Sharks without Being Eaten Alive” (prequel to the reality show, Shark Tank) suggested that entrepreneurs focus their energies on drumming up business and managing staff. He recommends leaving the jobs you know little about to professionals who know a lot in that category.
Ignore these words to your own peril. You could be the chum.
People tell me they are afraid to hire a tenant representative for leasing matters because they are convinced it will cost them an arm and a leg. Some think that independent leasing agents could be sharks who are circling round and round, waiting to eat up the precious reserves of a small business. This is a fish tale. You may gain more advantages by negotiating a deal, whether you or the landlord pays.
Commissions are a fact in doing business today. What you want is someone that is dedicated to your business. If you deal with the agent that manages your building and a dozen others, this individual could collect a plump profit with every renewal. If you are searching for a property and contact the manager of that building, he or she cannot show you comparable properties because their investment is with one place. If you negotiate the deal yourself, you may not know the inner workings of real estate. Watch closely before you dive into a deal. I’m writing this blog because I want to help tenants to get into the swim of things.
Here’s an example from my career:
The manager of a company with multiple properties, each over 10,000 square feet, gave Compass Commercial the job of negotiating new leases out of town and assumed they could do their own work on lease renewals locally. They told us firmly they didn’t need us for renewals because they were friends with the landlord. Once more, the landlord often took them golfing at his country club.
Stop for a moment. The kind of deal brokered on the 8th hole, consummated on the 19th hole could have a hidden commission that pays the country club dues. We have offered to review comparable bids and negotiate renewal rates for a percentage of savings on a new deal. On this project the client agreed. It took us about six months of sifting and sorting through RFP’s, but the renewal was signed with a savings of well over $3 million.
This tenant happily paid our fee because we earned it and they profited enormously from our research. Their savings on operational expenses meant a big deal on the bottom line. The company could use the extra dollars to invest in their core competencies – staying ahead of the sharks AND the friendly competition.