When you see rental rates quoted for space, those rates include the marketing costs for any leasing representative or for the developer’s in-house marketing. Compensation for the tenant representative is also part of the stated price. If a tenant representative is not utilized, the landlord’s listing agent (landlord’s advocate)will get the entire fee and the tenant will not have an advocate. Here are a few examples of the savings a tenant representative can win for you:

• Ensure you get the most value in any improvement allowances. For example, without good representation, the tenant may sign on to 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 be applied to lower the rent. (For a 100,000 sq. ft. building, that would mean a savings of $1.5 million!)
• Safeguard you against signing onto any provisions that run against your economic interest. For example, many leases pass through operating and tax expenses increases along to the tenant over a base year. Which base year? What is included in the base year expenses? Can the Landlord charge items in a different base year from that in which the expenses were incurred? These are all costly issues that will be addressed by the tenant representative.
• Define lease terms to benefit you. If your lease holds you responsible for ongoing maintenance, as many do, the tenant representative can assure that the definition of ongoing maintenance does not include the repair of pre-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 indicating the point at which your wear and tear commences.
• Win concessions that anticipate your actual needs. For example, a tenant representative can negotiate to receive a rent concession for “moving and set-up time for racking.” This means your lease begins, but you won’t pay rent during the time it takes to become operational move in, set up racks, etc. Because you will still operate out of your old space during moving and set-up time, this concession prevents you from paying double rent during the overlap period.

The tenant rep is a specialist in selecting space and negotiating leases. Making effective use of a real estate professional will generate cost savings and give you space and terms that improve the financial and competitive position of your company.

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