Tactix: The Tenant Broker
Tactix has authored a number of White Papers to help tenants be more informed consumers of real estate.
To request a copy of a specific White Paper, please submit a form here. Be sure to reference the White Paper's title in the form's comment field.
Almost all brokerage firms represent both landlords and tenants. As these parties have directly opposite financial objectives, this dual agency creates an irreconcilable conflict of interest, especially in smaller markets. While most brokerage firms downplay the significance of this conflict and claim to protect their clients by controlling the flow of information among their brokers through "Chinese walls" or similar methods, confidentiality is not the real issue. The fact is that landlords provide much more business for brokerage firms than tenants do and it just bad business to be aggressive when you're on the other side of the negotiating table from your biggest clients. This article describes real life fact patterns to illustrate how the conflict is unavoidable and ultimately works against the tenant's best interests.
Many landlords and brokers would like tenants to believe that there is an established "market" rent for each building or geographic submarket. Establishing these benchmark rates serves two key purposes. First, it helps anchor a tenant's expectations so it doesn't expect to lease space for less. Secondly, it establishes an end game for the broker's negotiations. Thus, if a tenant has been convinced by his broker that a building rents for $30/SF, the broker will be able to declare victory if he gets the rent to $29.75. This article refutes the concept of a market rent and provides guidance for securing the best economics in a lease negotiation.
According to recent studies, more than 70 percent of tenants renew their leases and remain in their current space. What most tenants don't know is that landlords make significantly more money on these renewal transactions than on new lease deals and that a landlord can rarely afford to have the tenant leave. This article analyzes lease renewals from both a landlord's and a tenant's perspectives and demonstrates how most tenants end up over-paying for the privilege of staying in their space. The article provides specific strategies to ensure that tenants get the best deal possible.
As real estate has become concentrated into fewer and larger institutional owners, landlords have the resources necessary to assemble impressive teams of in-house MBAs, attorneys and financial analysts to represent their financial interests when dealing with tenants. Unfortunately for tenants, their brokers often do not have the skill sets or experience to match the landlord's team at the negotiating table. As a result, many tenant brokers make critical mistakes when running lease transactions that ultimately cost their clients money. This article identifies four common broker mistakes so tenants can spot trouble before it becomes fatal to their deal.
One of the most common ploys brokers use to land an account is to convince a tenant that it should renegotiate its lease well in advance of the lease expiration. By getting a foot in the door well before other brokers have even put the tenant on their radar, a broker can significantly increase the likelihood of being engaged. Unfortunately, this isn't always the best strategy for a tenant. While there are instances where an early lease renewal can significantly benefit a tenant, it must be very careful that it doesn't rush to a decision when its leverage isn't optimized and it hasn't had a real opportunity to competitively bid its requirement in the open market. This article sets forth proven strategies for executing early lease renewals and ensuring that the economics truly justify the early action.
In many lease transactions, tenants receive an improvement allowance that they can apply to the cost of constructing their new space. To the extent costs exceed the allowance, the tenant is responsible for such excess. Because tenants often fail to appreciate the cost impacts of their space programs, and architects may not be given clear budgeting constraints to work within, build-out costs can turn an otherwise good lease deal into a nightmare of unexpected costs. This article provides tenants with practical guidance on how to manage their construction budget and design team to ensure that their budget is adhered to and there are no surprises at the end of the day.
Early stage or emerging growth companies have unique issues that distinguish them from more stable and mature companies when it comes to the consumption of real estate. Real estate solutions must be able to accommodate dramatic changes in employee headcount while preserving precious working capital. This article identifies the unique characteristics of emerging growth companies and offers creative strategies for helping these companies develop effective real estate solutions that are responsive to these issues.