How to Choose the Right Commercial Real Estate Broker
Finding a new office space can be intimidating, whether you are a small startup outgrowing a coworking space or an established company looking for a more centrally located workspace. Finding an office that meets your needs and is within your budget is a long process that requires support from a commercial real estate broker.
With their knowledge of the local real estate market, a good broker can unlock available spaces in a company’s desired neighborhood at the right budget. They can also work with a range of service providers, such as architects and project managers, to ensure that any anticipated renovations are permitted and proceed smoothly.
Here’s how to find a broker that is a good match for your company.
Create a brief
Before you start researching and reaching out to potential brokers, ensure you understand the terms of your current lease, including:
- Lease expiration date
- Rules around early termination and subletting
- What you need to do to restore your current space to its original state once you move out
This will help you determine your timeframe when it comes to finding a new space.
As you think about the needs for your new office, document the following:
- Desired office location
- Ideal length of lease term
- Current and projected employee headcount
- Desired building type
- Construction required—are you prepared to do a full renovation or do you need a move-in ready space?
- Budget for monthly lease and any renovation
- Schedule for the start of the lease and office occupancy
Brokers will want to know the above information so that the can identify properties that are a fit for your needs.
The process of engaging a broker, researching potential spaces, negotiating and signing a lease, and moving into a new space can take a year, if not longer. Your broker will represent your company throughout this process so it’s important to find someone you trust and enjoy working with long term.
While many companies will be approached by brokers in advance of their lease expiration date, being proactive will help you find the best match. When interviewing brokers, take time to understand the types of deals they have worked on, whether they have worked with companies similar to yours, the types of landlords they work with, and who is on their team.
Brokers should build strong relationships and have a successful track record of negotiating deals on behalf of their clients. Overall, they should:
- Know the local real estate market
- Have solid relationships with landlords and their agents
- Be responsive and communicative
- Possess strong lease negotiation skills and experience closing deals
- Understand when to bring in support, such as a project manager, architect, or engineer
- Prioritize client needs and serve as advocates for them
- Provide positive references and referrals from past clients
A good broker will focus on building relationships to find the right space for their clients, not pushing to get a deal done for the sake of getting their commission from a landlord.
Leverage your broker’s local knowledge
In addition to identifying spaces that meet your needs, a savvy broker can give your company an advantage when it comes to understanding the local real estate market and negotiating favorable terms with a new landlord. They will have insight into current real estate market trends in your city or neighborhood and what types of lease terms are common.
For example, growing companies are often looking for a building and lease that have flexible terms. Brokers can find buildings with shorter term leases or a number of leases coming due, giving prospective tenants the option to move out or into another floor as they grow.
Brokers can also work with a landlord to help secure additional benefits for tenants. For example, they can push for tenant improvement allowances, which give tenants a set budget to renovate or retrofit the space. If a broker knows a landlord is updating a building they can work rent credits into the lease if those renovations are not completed on time. Brokers can also advocate for other benefits, such as branding opportunities for their clients on building signage.
Regardless of your specific lease or renovation needs, brokers will help their clients navigate the relationship with a potential landlord and build protections into the final lease agreement.
Work with a project manager
A project manager can also help companies during their search process to find an office space they will be able to customize to fully meet their needs. Project managers have local knowledge of building codes and permitting laws that can support a seamless handoff between a landlord, broker, and tenant during the lease negotiation and signing process. They will then be able to coordinate the design, construction, and move-in process without delay or landlord interference so the tenant can move into the space on time.
Before a lease is signed, a project manager can identify any code violations or issues a landlord must fix and develop a specific landlord work letter that details how a space should be delivered to a tenant. They also help companies understand the cost of building out and operating spaces in different buildings, so they know the total budget required before making a commitment.
When you work with a broker and project manager, you can get a more complete picture of the costs, risks, and opportunities in a potential space so you can make the best decision for your company.