I’ve often come in to help clients restart a lease process after seeing many buildings with someone else. This generally happens when the prior broker started with the buildings and rates instead of what the client needs. It takes some time and well developed inquiry and listening skills to help you ensure that the facilities decision will support your company's objectives going forward. It is time well spent if your broker takes the time to talk with you and perhaps your key stakeholders about your business – fundamentals, growth, image, people, values, and decision making processes. If you don’t have this foundation developed with your broker, you’re setting yourself up for a ready-fire-aim scenario that costs you time and unnecessary anxiety, and probably money as well.
Lease decisions impact not only your finances, of course, but many important non-financial aspects of your business. Your branding, recruitment and retention, operating effectiveness in some cases and flexibility going forward are all available for fine tuning during a business space decision making process.
A very common issue is lack of transparency in the relationship between the broker and client. While you have brokers stating they work for the tenant, do they really? A very brief checklist...
- Who’s paying them? If not you directly (since many brokers participate in the listing fee instead of “charging” the tenant) then is the broker transparent about their income from every deal or willing to fix the number to eliminate bias?
- Is there a written agreement with a scope of work, deliverables, timeline, expectations and declaration of fiduciary obligation? You wouldn’t hire an attorney or accountant to represent you in a deal worth millions or hundreds of thousands of dollars without one – so does your broker provide this level of professional documentation of expectations and responsibilities?
- Do they or someone in their office represent any buildings for lease? It’s hard to be objective when the landlord is responsible for more income to their firm than your deal will provide – where’s the long term financial motivator?
On the “softer” side, a broker that "fits" you and your organization can be valuable at the margins – critical margins, sometimes – if your broker’s values are aligned with yours. If you are concerned about the triple bottom line, but you have to explain to the broker what this means, you may not be on the same page. If you have a commitment as a firm and personally to sustainability, it’s more likely you’ll get a deal that supports that if the broker has some history of results helping clients achieve this. LEED facilities or an active dialog about the tradeoffs of one alternative vs. another relative to the overall list of important features that make a difference to you, your team and the planet ensure triple bottom line results. If you want someone that understands getting buy-in from your partners or senior management team, it helps if your broker understands the importance and has some experience in accomplishing that.
This doesn’t supersede the technical expertise necessary in today’s world. You want to be sure your representative can assess the numbers – there are wide variations in the deal structure that can make a meaningful financial analysis a key factor in negotiating and understanding how to balance the issues, the dollars and the total final package. If the broker can’t have a meaningful conversation with your CFO then they may not have the skill range to get you the best overall transaction that addresses both the “hard” and “soft” aspects of your facilities needs.
Another important fit aspect is that of teaming and leadership. I personally prefer a relationship where I’m leading the group to help clients get a lease that fits well. Not driving, not directing, but leading by understanding the needs of the client, the opportunities of the market and a range of ways to get the two to mesh in a successful outcome.
Time is a challenge in all of this. You have a full plate already, most likely, so how do you deal with the additional issues of dealing with the lease? My approach is to work with clients as a “real estate department for hire” – being the sort of assistance that you can count on to have your back in the process. It takes a lot of time – typically more direct and calendar time than people assume. Coordinating tours, designing, permitting, buildout, moves, documentation – it all takes time and much of it is serial not parallel so it adds up. You want to allow for it and keep your personal time reasonable by having someone you can count on to keep things moving and raise the issues necessary as things progress.
So, be sure that you have a broker who:
1. Has the skills to understand your business – functional, values, direction
2. Has the technical skills to work the process professionally
3. Truly and clearly represents you, not the landlord, without bias or conflict of interest
4. Has your back and ensures the process and market are addressed in a manner to best serve you, your team and your business.