You, the commercial real estate broker, live and breathe your market. Helping businesses find space to lease or buy is what you do and what you know so well.
As for the people running those businesses, they have other things on their minds! While some might have a bit of familiarity with the market, many of them don’t have the faintest clue as to how to find the right space for them.
So while you’re aggressively calling to win their business, keep in mind that they’re probably pretty stressed about the thought of the move. Considering rent may consume up to 20% of company revenues, depending on the industry, and that the devil is in the lease details, it's important they make the right decisions. That starts with selecting the right broker for their needs.
How we would advise a business owner looking for space
To learn how to better win their business, let’s put ourselves in their shoes for a second. If you were a business owner, how would you choose? Here are 8 tips we would give to someone looking for a broker.
1. Hire a specialist who knows your property type and geographic market.
There are generalists and specialists in commercial real estate. Many generalists are well-regarded, catering to multiple segments of the market. This often works well enough in secondary and tertiary markets that just aren’t big enough for advanced specialization.
But why choose a jack-of-all-trades when you can work with someone who has deep experience in exactly what you need? If your need is pretty specific, hire a specialist.
2. Be sure the person is knowledgeable about the broader market and industry trends.The commercial real estate industry is constantly changing. There are more space types and deal structures than ever before, as well as ancillary services provided by some landlords. Prospective brokers should demonstrate knowledge about the market at large—including evolving lease terms, amenities, tenant improvements, and cost-sharing—to help you understand what options may be available.
Unless you know exactly what you want, where you want to be, and what you want to pay, look for a broker who is a consultant as much as a transaction specialist. Ask questions that indicate your openness to different scenarios to gauge a broker's willingness to identify and help you evaluate alternative options.
3. Seek a good listener who is not just interested in closing a deal but is willing to advise you.
Brokerage firms come in all shapes and sizes. Be open to working with all manner of professionals and teams, based on what's important to you and the level of service you need. Bigger firms and brand names may have a breadth of resources to help, but don’t discount the lone broker who knows the market and key players inside and out. It just depends on where you are and what you’re looking for.
4. Consider small, medium and large firms.
5. Discuss how any contracts, fees or commissions work ahead of time.Effective communication up front will help eliminate any potential confusion at the end of the deal, and certainly head off surprises. Also, discuss the potential for the broker to represent both parties, and what that could mean for you.
6. Ask for references from past clients.Don't be afraid to ask prospective brokers for references, including clients he or she may have helped who were facing challenges similar to yours. A key question for references: "Tell me about the broker's work as a negotiator on your behalf."
Many brokers will tell you that the real estate business is all about relationships: knowing landlords, sellers and other brokers. Relationships are critical, to be sure, but not enough. Today, some information is only available through online services, and technology enables smarter location and pricing decisions, not to mention document management and speed to close. Make sure the broker you hire is up to date.
7. Be sure the broker is tech-enabled.
8. Date a few times before you commit.Before you hire a broker, have at least two or three calls and meetings to gauge his or her responsiveness, communication style and understanding of your situation—and the consistency of their behavior. It's the same as hiring someone for a job at your company: It's not likely you would hire someone after just one meeting.
Also, note that most commercial brokers don't just facilitate transactions, they open doors. By engaging a professional commercial real estate expert, you'll be able to tap into his or her network of real estate lawyers, property managers and service providers, as well as their personal knowledge base.
Would you get hired?
Does that sound like good advice? It can be helpful to remember what the client is really looking for, and tailor your pitch accordingly. It’s your chance to show how you can be truly helpful as an advisor and expert, not just a service provider.