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Scott Naasz
President Broker
North Star Commercial Real Estate Advisors

The Importance of Tenant Representation in Commercial Real Estate

When looking for commercial space to lease, it’s crucial to have an experienced commercial real estate broker representing you as the tenant rather than just relying on the landlord’s broker. Here’s why tenant representation is so important in commercial leasing:

  • Tenant brokers have a fiduciary duty to look out for your best interests. A landlord’s broker is legally obligated to represent the best interests of the property owner. Your interests as the tenant may conflict with what the landlord wants. A tenant broker serves only you.
  • Tenant brokers bring specialized expertise. They understand commercial leases inside and out—what’s negotiable and what’s not, common pitfalls, and how to get the most favorable terms. Landlord brokers know these leases too, but they use that knowledge to benefit the landlord.
  • Tenant brokers provide market insights you can’t get elsewhere. A good tenant broker will monitor the local rental market constantly, tracking lease rates, vacancies, new listings, and tenant demand. This market intelligence helps them negotiate the optimal deal on your behalf.
Two business people shaking hands, with one's hand holding a document titled 'Lease Agreement'
  • Tenant brokers expand your options. An experienced broker representing tenants knows all the spaces that meet your criteria—even those not actively marketed yet. Going direct to landlords limits you only to what they promote. A tenant broker can uncover “quiet” options you’d otherwise miss.
  • Tenant brokers negotiate better financial terms. With their market knowledge and deeply honed negotiation skills, tenant brokers can often negotiate substantially lower rental rates, more generous tenant improvement allowances, and other concessions that benefit you financially. Landlords expect tenants to bring brokers and build that cost into deals.
  • Tenant brokers customize lease terms. Beyond financial terms, an expert tenant broker knows where landlords may be flexible on lease length, renewal options, exclusive use rights, subletting, assignment rights, and other legal terms. They can craft a lease agreement tailored to your business’s needs.
  • Tenant brokers manage the process smoothly. Navigating letters of intent, lease proposals, negotiating points, concessions, and execution involves many steps. An experienced tenant broker will efficiently guide you through the process.
Two business people shaking hands, with one's hand holding a document titled 'Lease Agreement'
  • Tenant brokers save you time. Leasing commercial space is complex, time consuming, and distracting from your core business. A competent tenant broker does the heavy lifting for you, streamlining the process.
  • Tenant brokers provide local market insights. Beyond lease rates and terms, a broker knows the nuances of different buildings and areas—nearby amenities, parking, access, future development plans, and more. They can advise you on where your business will thrive.
  • Tenant brokers know reputable vendors. Once you select space, you’ll likely need architects, contractors, vendors for security systems, IT infrastructure, etc. A seasoned tenant broker can recommend vendors they’ve worked with successfully for other clients.

Conclusion

In short, tenant representation allows you to level the playing field in commercial leasing. Landlords have teams of real estate professionals looking out for their best interest. With an expert tenant broker by your side, you can be confident you’re getting the optimal location on the most favorable leasing terms for your business. The broker’s fees are well worth it, as they will negotiated savings and concessions that more than offset their commission. Don’t lease commercial space without tenant representation.

Disclaimer: The information provided in this article is for educational purposes only and should not be considered financial or investment advice. It is always recommended to consult with a qualified financial advisor or investment professional before making any investment decisions.

Contact Us Today

Scott Naasz: (612) 819-8285

Email: scottnaasz@kwcommercial.com

Kaitlyn Page: (701) 220-5123

Email: kaitlynpage@kw.com