Count the Savings of Tenant Representation
A rental rate quoted for a space includes
- the marketing costs for any leasing representative
- the developer’s in-house marketing
- compensation for the tenant representative.
If you don’t use your own tenant representative, the landlord’s listing agent—and advocate—gets the entire fee. You paid without having an advocate of your own.
Here are a few examples of how much savings your exclusive tenant representative can win for you:
Improvement allowances. Acting on your own, you may sign an improvement allowance of $35 per square foot, not knowing that the actual market price for such work is $20.
The tenant representative knows the market and would negotiate that any remaining funds from that allowance be applied to lower the rent. For a 100,000-square-foot building, that would mean a savings of $1.5 million.
Economic interest. Many leases pass along to the tenant increases in operating expenses and taxes over a base year.
An experienced tenant representative will address costly issues that include
identifying the base year
detailing what’s included in the base year expenses
whether the landlord can charge items in a different base year from that in which the expenses were incurred.
Beneficial lease terms. Your lease holds you responsible for ongoing maintenance. The tenant representative can assure that ongoing maintenance does not include the repair of existing deficiencies, such as roof problems that may already have plagued the building.
The tenant rep will know how to look at the move-in condition as a benchmark for when your wear and tear commences.
Anticipation of actual needs. A tenant representative can negotiate to receive a rent concession for “moving and set-up time for racking.” This means your lease begins at signature, but you won’t pay rent during the time it takes to become operational.
Because you still will operate out of your old space during moving and set-up time, this concession prevents you from paying double rent during the overlap period.
Commercial Real Estate Group of Tucson specializes in representing tenants and corporate users across the United States, Latin America, Europe and Asia as a member of ITRA. For more information call 520-299-3400.
