Tuesday, March 6, 2012

Avoid Strategic Mistakes in Real Estate Decisions


 Service providers of all sorts like to say that they’re “strategic”.   What does it mean for a real estate broker or consultant to be contributing to a client strategically, not just tactically?
Most brokers in the business more than a few years have some tactical capability.  They can be friendly, research options and shuttle paperwork to put a basic deal together.  While this is the primary objective of the landlord, and the structure by which most commercial real estate (CRE) providers are paid (through transaction fees/commissions), it is not a good criterion for success from the business tenant’s or buyer’s perspective. It does not rise to the level of strategic support for the client and leaves many important factors to chance.
For the user side of an arrangement, the criteria for success rests more on how the final outcome supports the brand, people and operations of the organization.  Of course there are financial concerns and fundamental tactical goals for a lease or purchase for the business.  In the long run, however, the larger impact will occur – positive or negative – related to the fit of the facilities arrangements for the company across a holistic array of impact areas.  CRE professionals that tailor their service to businesses instead of landlords work to ensure their clients are making informed real estate decisions.  Informed decisions rest on a good understanding and articulation of the range of goals, objectives, directions and values of the firm – broad, long term, strategic.
The best agreement is the one that helps the company thrive.  What that means and how that’s achieved is different for every client.  Sorting that out and helping the client get what they need in the process sorts out the dedicated tenant representative from the rest of the brokers.
What are some of the indicators to identify the CRE experts that will help your business the most?
If the broker starts by telling you about the market instead of asking you about your firm, they’re not focused on your needs.
If they talk about the size of their completed deals instead of the results and successes of their past clients, they’re not focused on your needs.
If they want to show you spaces before they’ve inquired about what is working and not working with your current space, and asking about where you see your organization headed for the next 3, 5, 10 years, they’re not focused on your needs.
If, on the other hand, they engage in a conversation around your firm’s needs and values - the relationship between you and your clients or customers, how you think about your employees, retention, what’s important to you and for the success of your firm, what’s needed for your operations now and going forward - then the process is off to a productive start.  This path is headed to solutions that support your firm broadly and forward looking.
Process is the key.  You want someone helping you and representing your interests that is asking good questions and really listening.  They should be able to articulate your range of desired outcomes, and to move through the decision making process with this foundation.  The better understood the range of desired outcomes, the better the ultimate fit of a lease agreement or acquisition in supporting your company’s success.
Good inquiry and process is valuable, and worth the time for you to find the right person to work with.  It produces consistently solid outcomes resulting in your facilities supporting your bigger strategic, not just immediate tactical needs.

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