This article by Jay Wall originally appeared in the Houston Business Journal, November 28, 1999.
Selecting a broker to assist with office leasing details and negotiations is a delicate and sensitive task — somewhat like choosing a dentist, except there are no pain killers to protect the prospective tenant from an inept broker.
Basically, the first two criteria of a leasing broker are reputation and experience.
Who has the broker represented in the past? Verify the broker’s credibility. Charming people make excellent dinner companions, but may not be the best choice for a broker.
Don’t be bowled over by the “Wizard of Oz” theory. Brokers in some leasing firms, when asked why they do the big deals, reply, “Because we do the big deals!” A good deal depends on the firm’s size and financial capabilities coupled with the broker’s ability.
Actual experience (not one year’s experience 20 times) in tenant representation is important.
Make certain the broker understands the firm’s needs. The questions that the broker asks will clarify his awareness of what the business is all about.
Make sure the broker subscribes to one of the office database services or has sufficient support staff to do the necessary research about the firm’s needs to successfully find the right location.
Anticipating future needs for expansion is also part of the criteria of creating a trend-setting deal. A visionary who can assess the best and worst of any leasehold is critical. Business is changing, so flexibility is that much more important.
In addition to renewal and expansion options, a well developed “bail out clause” is paramount to a flexible lease in that it addresses the possibility of contraction and/or cancellation, leaving options open to the tenant wherever possible.
DEVELOPING THE RELATIONSHIP
Even a tenant who has an existing relationship with someone he has used in the past should talk to several other brokers before deciding to go with the same broker time after time. As a business grows, a new perspective may be just what a business needs.
The prospective tenant should review everything the broker brings him in the broker’s presence. Asking pertinent questions, and answering those of the negotiator as well, is a large part of building a good transaction relationship.
In meeting with the landlord, the prospective tenant should avoid creating a break in the established train of thought by interrupting the negotiations and, thereby, giving control to the other side of the table. The power of positive flow is the ulterior motive of all good negotiators, and control is the only choice when it comes to winning.
The prospective tenant will be turning some control over to someone who he has designated as his representative. He should avoid weakening the broker’s grip by taking that control from him. He should permit the broker to do it his way. If the prospective tenant becomes concerned, he can subtly write a succinct note and pass it quietly to the broker, who should be astute enough to recognize that this marks a moment to take a drink of water or to clear his throat. If this doesn’t work, suggest a momentary break from the meeting and address any concerns with the broker in private.
Planning ahead will allow the broker and prospective tenant to create the leverage needed for these times. Remember, a plane that is off course two degrees at take-off can end up thousands of miles off course.
STICKING TO THE FINISH
Closure is a natural result of any well-planned and well-executed deal. Good closure goes beyond the signing of a lease and should still be apparent at the turning of the key in the new offices. The broker who cares should stick with the tenant right up to the time that he takes occupancy, making sure that everything goes as planned.
The broker’s interest in the development of space can be helpful in allocating the proper space per employee, based on a clear understanding of industry best practices.
For instance, in a law firm, space is planned with a new perspective since the introduction of off-site storage services that hold inactive files. The advent of Nexis/Lexis has rendered the traditional law library virtually obsolete. The universal use of computers has caused the ratio of support personnel per attorney to fall, tremendously reducing the need for space. Additionally, many firms have quit differentiating associates, partners and senior partners via office size. One size fits all, further reducing the need for space.
A broker should have such information and, using it, create a pact with his client and work for his best interest.
The right broker readily recognizes that referrals and renewals are an ultimate objective. A client who is pleased with a broker’s services provides both. For these reasons, along with the natural appeal of a job well done, a reliable broker will be around to check with his client well after he is content at his new address.
It’s important to choose a good broker who can be trusted with the keys to the company’s office negotiations. The outcome of a bad lease cannot be offset by the cordiality of a smiling friend. The strong, successful broker prefers being respected to being loved. In negotiating an office lease, it pays a prospective tenant to choose a broker that he can respect in the future, that he enjoys working with, who is truly working in his best interest.