Why Should I Hire a Broker & Who Pays the Commission?

Hiring a Commercial Real Estate (CRE) broker to represent a tenant or landlord can offer several advantages. Here are some reasons why businesses or investors often choose to work with a CRE broker when leasing commercial space:

  1. Market Knowledge: CRE brokers have in-depth knowledge of the local real estate market. They can provide insights into current market trends, rental rates, and available properties, helping tenants and landlords make informed decisions.
  2. Negotiation Expertise: Brokers are skilled negotiators who can work on behalf of tenants or landlords to secure favorable lease terms. They can negotiate on aspects such as rental rates, lease duration, tenant improvements, and other important provisions.
  3. Time and Efficiency: Searching for and securing commercial real estate as well as monitoring available, competitive properties can be a time-consuming process. A broker can streamline the process by identifying suitable properties, scheduling viewings, and managing the paperwork, allowing tenants and landlords to focus on their core business activities.
  4. Access to a Network: Brokers often have established relationships in the commercial real estate market whether it be active tenants in the market, property owners or comparable market knowledge of “deals in the market.” This network can be valuable in uncovering off-market opportunities and accessing a broader range of available properties.
  5. Customized Solutions: A CRE broker can tailor their services to the specific needs and requirements of the tenant or landlord. They can help identify properties that align with the tenant’s business goals or advise landlords on the right tenant fit and ensure that the lease terms meet a client’s needs.
  6. Understanding of Lease Terms: Commercial leases can be complex, with various clauses and legalities. A broker can help tenants and landlords understand the terms of the lease, including any potential pitfalls or advantageous provisions. They negotiate various business aspects of the lease, including rent, lease duration, renewal options, modifications, or improvements to the property (including who will bear the cost) and any special provisions (e.g., subleasing, expansion, contractions, or early termination).
  7. Cost Savings: While it might seem counterintuitive, collaborating with a broker can lead to cost savings. Brokers can leverage their market knowledge, process efficiency and negotiation skills to secure favorable terms and save parties money in the long run. They clarify all additional lease costs related to base rent, maintenance, utilities, property taxes and common area fees. Additionally, they ensure you fully understand how these costs are calculated and negotiate to limit any unexpected expenses.
  8. Risk Mitigation: Brokers can help tenants navigate potential risks associated with leasing commercial space. They can advise on issues such as zoning regulations, environmental concerns, and other factors that may impact the suitability of a property.
  9. Experience and Expertise: Commercial real estate transactions can be complicated, and having a professional with experience in the field can be invaluable. Brokers bring a level of expertise that can guide tenants through the entire leasing process.
  10. Communication: Successful negotiation is about finding a balance that meets both the tenant’s and landlord’s needs. Clear communication and a well-researched approach can significantly improve your chances of securing a favorable lease agreement.

While a broker’s role and the payment of commissions should be disclosed upfront, it is common for brokers to negotiate leases in a competitive marketplace and generally the commission is paid by the landlord. Rather than embark on searching for properties and negotiating a lease yourself it is wise to reach out to a broker first. They can explain the negotiating process, their value and how they are paid.

In summary, hiring a CRE broker to represent a tenant or landlord can provide numerous benefits, including market knowledge, negotiation expertise, time savings, access to a network and personalized solutions tailored to meet their needs. Feel free to reach out to Reliant Partners if you have questions or interest.