Facility costs are typically one of the largest expenses in a corporate budget. Maximizing the value of facility investments is a key business strategy. Why, then, would you want to collaborate with a real estate firm that represents landlords and tenants — eliciting potential conflicts of interest — when you could opt for a firm that solely represents you, the tenant?
Very simply, many organizations don’t know that exclusive tenant representation is an option. While it’s the preferred approach to real estate transactions in most major metropolitan areas around the country, it remains virtually unused in the metro-Detroit market. However, businesses that have experienced this approach typically don’t return to the traditional model of working with a real estate firm that represents both the buyer and the seller; exclusive tenant representation affords too many advantages.
What Is Exclusive Tenant Representation?
The foundational concept behind tenant representation is just as it sounds: representation for a tenant or user of real estate. Exclusive tenant representation does not extend to landlords or real estate owners, which is the business model for most real estate service providers. Instead, the tenant experiences a dedicated champion for their interests only. Since most real estate service providers offer both listing services for landlords and leasing and acquisition services for tenants, these providers can experience a conflict of interest in negotiating a deal that maximizes benefit to both types of clients. Tenants using an exclusive tenant representative can be confident that their representation is conflict-free, since at no point has their tenant representative represented a potential landlord in the market.
The Plante & Moran CRESA Difference
Through exclusive tenant representation, Plante & Moran CRESA encourages clients to evaluate all real estate alternatives: lease, buy, or build. First, we perform an analysis to confirm the amount of space needed. Then, we evaluate all options to help our clients make an informed, strategic business decision. We provide a short list of properties considering both economic and non-economic factors, as well as a detailed analysis of sites comparing their unique characteristics and associated financial advantages. This process integrates in-depth market knowledge with a strategic understanding of efficient and effective usage of space. We also specialize in negotiating municipal incentive packages to supplement our clients’ facility financing.
The Bottom Line
What does it cost to engage a tenant representative to assist in real estate decisions? Commission rates are fixed for real estate transactions, with or without tenant representation. Because the tenant representative receives compensation for their services through the commission paid by a landlord, there’s no additional cost to the tenant to hire an exclusive tenant representative. While some time is required from our client as the decision-maker, we perform the majority of the transactional work, allowing our client to focus on their business responsibilities.