5 Reasons a Good Commercial Real Estate Broker Adds Tremendous Value
Choosing the right office space is one of the most important steps a small business owner can take, which is why it’s crucial to have an expert commercial real estate (CRE) broker with local ties to guide you through the process. Not only will a CRE professional handle every detail of the transaction, they also provide invaluable insights, connections and business support that will ultimately benefit both your top and bottom line.
Access to a Bigger, Better Market
In a city as big as Chicago, there are literally tens of thousands of places your business could call home. Active brokers make it part of their job to be in constant communication with local owners, developers and investors providing them with knowledge of both on- and off-market opportunities. They are your guide to locating the right space for you, opening up infinitely more possibilities for your business.
Realistic Views of the Space
Commercial brokers work hand-in-hand with the best real estate service providers – architects, contractors, interior designers, etc. – to provide a complete picture of space capabilities and potential costs. Can a 100-year-old converted warehouse handle a gut renovation? What are the sign requirements in a specific ward? Is it worth it to put in new windows? An experienced broker will be able to get the answers.
More Affordable Monthly Payments
Everything is negotiable (from tenant improvements to rent credits and even access to first-class amenities) if you know the right way to ask. A CRE professional tuned into the local market will know the moves to ensure you are getting the most out of your monthly payments.
A Better Understanding of Your Contract
As a business owner, it’s imperative that you have a thorough understanding of a document before you sign it — how can you be expected to comprehend the industry specific terms and legalese that fill a commercial lease? Chicago CRE brokers live and breathe this language every day, creating much-needed guides in these complicated transactions. In fact, Tenant Advisory Group negotiates around 40 transactions per year, working with approximately four to six different properties for each deal!
Support Beyond the Lease
CRE brokers work with dozens of professionals across a variety of industries on a daily basis, carefully curating a network of trusted individuals. A close relationship with your broker can provide you access to the top attorneys, accountants, bankers, insurance brokers, financial advisors, web designers and IT companies in Chicago.
For more information about how Tenant Advisory Group can be your partner in all of your commercial real estate needs, click here.
Real estate negotiating can either be an exciting or stressful process. If you are a broker you must have ice in your veins and know the people you are dealing with. Fortunately, if you are a third party, this allows you to be much more objective and take the emotions out of it. Viewing the other side of the deal as your partner (rather than your adversary) is a way to get started on making both sides happy. Here are a few tips to think about while negotiating.
Allow for Multiple Outcomes
Successful negotiators recognize that there is not merely one outcome that best suits both parties. There are many different ways for you and the other side of the table to meet in the middle. No matter the negotiation, maintain an open-mind about different processes that can bring you together for a compromise. As simple as this may sound, too many negotiators get locked into their one ideal solution and do not let themselves stray from this thought process. The essence of a negotiation is that both parties come to a satisfactory conclusion, and this can only happen if both sides allow themselves to open up to other possibilities.
Listen Before You Speak
The first terms thrown out in a negotiation will be the extreme highs and lows, with the final numbers landing somewhere in the middle. Keeping this in the back of your mind; let the other side throw out the first offer and then use that information to help you make an educated counter offer. Generally speaking, you can understand a lot about what the other side values most by just paying attention to their first offer. The first person to lay down their cards naturally loses some leverage by having to show some of their hand. Listen and comprehend what they tell you and parlay this information into a quality counter offer, rather than blindly throwing out an offer first.
Cooler Heads Prevail
The entire negotiating process is as much about emotion as it is money. In the 1987 movie Wall Street, Gordon Gekko told Bud Fox to never get emotional about a stock. Of course that movie is a far cry from dealing with negotiating in real life, but some of it does hold true. You have to understand that negotiating can be a slow, painstaking process, but if you let emotions cloud your decision-making, then it will make your life much worse. Take a step back every now and then, and try to enjoy the process – the more rational you are, the better you will do.
Silence is Golden
Once you have made a counter offer, be quiet. This is a very hard point to get across because the negotiating process can be a stressful one. Everyone wants instant gratification, however this should not be the expectation after delivering a counter offer. Once this process is under way and your bid is out there, there is no need to say anything else – your silence will speak volumes. If you put out a bid, and quickly follow up with instigating questions – or worse yet, try to make your bid more favorable – your competition has the upper hand. This can be difficult, but if you have presented your position in a clear and concise manner, then it is time to play it cool and wait for an answer from the other side.
Don’t Ask, Don’t Get
This is something that rings true in all walks of life – if you fail to ask for something, how will you know if you can get it? Afraid that your bid is too low, your lease term is too short, or offering price is too high? Why not give it a shot anyway? Ensure that you are not insulting the person, but at the same time, you will not be able to achieve your ultimate goal of getting the best deal without at least offering it up. In summation, to gain something, you have to ask for it.
If you have ever been in a room with a car salesman, you know they love negotiating. They have tons of experience and are able to keep it cool. The same goes with brokers – they are the experts and typically have many years of experience. If you follow these rules, hopefully you will be able to see the enjoyable side of negotiating.
All businessmen and women know that a baseline of trust between parties is critical to the success of any negotiation. But within the course of business dealings, how do you build that trust? What active steps can you take to raise the chances of a positive outcome for both sides? Instead of simply hoping that your personality and that of the other party mesh well, go out of your way to make your next negotiation flow smoothly.
Here are a few key action items that, if handled well, can set a positive tone for a great business meeting.
Being guarded with a lot of information is a quick way to ruin a potential negotiation. Open up to the other party and inform them of what you are looking to get out of this resolution. This is not to say that you have to divulge any and all trade secrets to every new business partner. However, sharing your overall goals for the process will open up the lines of communication and make sure all other efforts are not fruitless.
The tone of the meeting is extremely important and also very malleable. Your body language and the pace that you set can be determining factors in how comfortable it feels on the other side of the table from you. Allowing emotions into a negotiation often carries a negative connotation. However, bringing positive attitude and connecting emotionally to your counterpart is essential to developing a strong bond of trust. Actively listen to what he/she is looking for and show an eagerness to bring both sides closer to a compromise.
Timing and Location
Seemingly minute details such as the time and location of a negotiation can actually add up to a success or disaster depending on how well they are handled. Try and find a time that both parties will not be interrupted by the endless distractions that professional (and personal) lives can attract. Ensure that both sides have blocked out this time, as these distractions can innately create a more stressful environment. Along with the right time, find the right place. To help establish trust, either defer the location choice to the person you are meeting with or choose somewhere that will be convenient and comfortable for everyone.
From the seasoned lease or contract negotiator to the first timer, it is vital to have a strong set of ideals behind all negotiations. The more confidence in and acumen with these skills that one has, the higher opportunity for coming away with a positive outcome.
At Tenant Advisory Group, negotiations are a part of everyday life and these are key reminders that have to stay top of mind throughout any negotiation to be successful.
Information is the key to any successful negotiation. The more you have, the better position you will be in to achieve your goals. Put yourself in the best position by doing quality research and knowing all you can about the scenario.
Gaining leverage allows you easier access to achieve your goals in the negotiation. Often times, leverage can be found by gathering more information. This points to tip #1, if you have information that either the other side does not have or that they think you do not have, then the leverage has been shifted in your direction.
You never want to take every penny off the table. Leave a little something for your opposition in a good faith showing of being fair. You may end up crossing paths again and you want to be able to pick up where you left off, which is successfully completing a negotiation. Part of a successful negotiation is ensuring that neither side gets the feeling of being shortchanged, which could lead to resentment. Get the best deal, without being greedy.
4. Maintain Calm Demeanor
It is very important to never raise your voice. The purpose of yelling and screaming is to get someone to listen more closely, but it actually has the opposite effect. If you raise your voice, people will stop listening and progress will be halted. When negotiations become shouting arguments, nobody wins.
5. Understand your Adversary’ Motivations
Understanding what your opponent’ goals are makes the accomplishing of your goals that much easier. Often times, the two sides might have varying definitions of success, making attainment a far greater possibility. If both sides can feel this success without conceding too much, then that is an ideal negotiation.
Negotiation is an integral part of initially securing your lease. Imagine this: Your broker did a great job negotiating your lease. The space comes with all the amenities you could imagine AND you saved a great deal of money a few years prior when you signed. Your company loves this space, but this year has been a little slow and goals weren’t quite reached.
Before you uproot your entire company and move everyone to a space you deem sub-par, consider renegotiation in the form of back-end loading.
In commercial real estate, this would entail negotiating a reduced rate for a certain period of time. For instance, you could negotiate an elimination of $5 per square foot for a year and then add that $5 back in the lease the following year.
More often than not, a landlord will not want downtime on their space. The money the landlord would lose (during this reduced year) would likely be much less than the money he or she would spend searching for a new tenant should the existing tenant vacate or go out of business.