Perhaps you consider yourself a good negotiator. Maybe you’re completely happy where you are and have a good relationship with your landlord. So what can a broker do for you? In a word — plenty. The golden rule of real estate negotiation is: “Leverage = Time + Options.”
Unless you have unlimited time and are fully aware of every single opportunity in your market, you’re likely going to leave considerable cost savings on the table if you negotiate on your own. Here are 10 reasons why working with a broker makes good business sense:
- You have nothing to lose and everything to gain.
For their services, brokers receive a fee which is paid by the landlord, not the tenant. It costs you nothing to use a broker. Landlords will sometimes offer to pass the amount of the fee along to the tenant if they represent themselves. In reality, even if you do receive the brokerage fee “on paper,” you’ll pay for it in other ways. According to industry research, a good broker will save an average of five times the cost of their fee.
- Brokers are good at what they do
Brokers are immersed in the market all day, every day. It is their full-time job and core talent. They have the research and negotiating skills to succeed, and deep, real-time market knowledge.
- Brokers have access to better information
Even if someone in your organization has handled transactions, they will not have access to the up-to-the-minute market intelligence of a working broker. Brokers are connected to information that provides you the best options at any given time. Even if you’re not considering moving, this “ammunition” increases your leverage in negotiating with your landlord.
- Brokers save you time
Why should you spend time researching the market and negotiating with your landlord when a broker will do it all for you? Engaging a broker allows you to spend your time on what you do best.
- Your process shifts from reactive to proactive
Tenants typically don’t think much about their leases until renewal time. Brokers think about leases, market trends and opportunities every day. Establishing a relationship with a broker can elevate your process to a proactive mode that anticipates opportunities in advance.
- Not using a broker tips your hand to the landlord
Landlords typically believe that satisfied tenants will renew and accept their increase. Not using a broker suggests to your landlord that you don’t plan to move and that you won’t drive a hard bargain. Using a broker will “keep them guessing” and compel them to make their best offer to encourage you to stay.
- Using a broker reflects the good business practice of outsourcing for non-core services
Organizations regularly outsource for specialized skills outside of their core capabilities such as accounting or legal counsel. Real estate is typically the second- or third-largest expense on operational balance sheets. With so much at stake, it pays to outsource to a specialist.
- A major brokerage firm gives you one-stop service for all locations
A strong brokerage firm operating in multiple markets can serve you from a single point of contact, eliminating the hassle of finding a good broker in every location where you need one. The best brokerage firms will provide multi-city tenants with an account manager who coordinates with local experts in each market.
- Brokerage firms accumulate and share the benefits of experience
Regardless of the scope of your portfolio, major brokerage firms transfer collective insights and lessons learned into standard operating procedures for every new assignment. Even the smallest, most seemingly routine lease negotiations can benefit from this.
- A brokerage firm is more capable for specialized needs
Perhaps you wish to investigate special opportunities such as build-to-suit facilities or “green” upgrades. A full-service brokerage firm has staff that focuses on these and other areas like lease administration and project-management to help you build out a leased space to suit your needs.
Torrey Littlejohn is a Vice President in the Dallas office of Jones Lang LaSalle, a global commercial real estate brokerage firm. She specializes in assisting users of office and industrial space.