Why Use a Commerical Real Estate Broker?

I want to give a little insight to the commercial real estate world. Perhaps I can better explain what many people ask me, why do I need to use my own broker?

Most people will just call a “For Lease” sign in the window. Most of the time, you are not talking to owner of the building, you are talking with a real estate broker that represents the owner. By allowing that broker to submit an offer on your behalf you have essentially hired that broker to represent you. That broker will be paid by the Landlord as both a listing and leasing broker (known as a dual agent in residential real estate).

Did you know, you can have your own leasing broker for free? What we call a broker is known as an “agent” in the residential world. In most cases (95% or more) your broker will be paid by the Landlord once a transaction is complete. Your leasing broker will cost you nothing, brokers are paid 100% commission only. It is the same concept as in residential real estate. The seller pays the buyers agent to procure (or bring) a qualified and willing buyer to the transaction.

Here are just a few reasons to consider hiring your own commercial broker:

  1. The number one reason being the landlord’s Broker will always have the best interest of their client, the Landlord first, which is not often advantageous for you.
  2. As you may or may not know, lease information is not public and there is no shared database with completed lease information. You will only be able to access recently completed lease info by a broker active in the market who will be able to share with you length of lease, lease starting rate, rental increases, options, tenant improvement allowance, free rent period and so forth. This information will dictate your lease terms.
  3. Your broker will represent you only, to get you a fair deal with your best interest in mind. A broker knows the terms, clauses, and related lease legal jargon that you may not have previously encountered. Do you know the difference between First Right of Refusal and First Right of Offer?
  4. Time and due process, brokers work on over 40 deals per year and are familiar with timing issues, city issues, design and construction issues. Brokers are often able to mitigate items before they become issues and offer you the resources needed to save time and money to go from dream to fruition. Most importantly, using a broker frees up your time to focus on your business.

Do your homework when looking for a broker!

  • Makes sure your broker has a track record in the specialty you are looking for i.e. retail, industrial, or office. Even better if they have worked with similar type uses as your business (such as: restaurants, salons, car dealerships, dentist, doctor, childcare, banks)
  • Be wary of a residential agent offering their services. A commercial brokers hardly ever cross into the residential market and the two are VERY different. Ask for a full list of COMPLETED commercial transactions including dates, square footage, and contact info of their client.
  •  Ask other businesses who they used and if they would recommend their broker, perhaps friends if they know of any reliable commercial real estate brokers.
  • Often times contractors, architects, or your Economic Development Department can tell you who are active brokers in the market. 
  • Fancy resumes and large corporate name tags do not tell the whole story. What deals has a broker recently completed? The market is constantly changing and you want a broker who knows today’s information, not five years ago.
  • Most important, use your gut. Make sure you are comfortable with your broker and they are willing to answer questions and fully under your needs and wants. A broker should show you the entire market place, not just listings from their office.
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About thestorefront

Commercial Real Estate Broker in the San Francisco Bay Area specializing in retail sales and leasing.

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