Does Using a Commercial Agent Raise the Cost of my Lease Rates?0

Posted by Thomas Miller, CCIM

myth debunkedThis is part of our ongoing series that debunks commercial real estate myths.

 Myth #7:  “Using a commercial agent raises the cost of my lease rates.”

If you are a prospective or renewing tenant and you hear a statement like that, it’s likely coming from a landlord – and for good reason. When you hear, “If you use an agent, it will raise your lease rates,” a landlord is really saying, “I don’t want you to use the services of a professional commercial agent because they know too much about the market and will be problematic to getting the lease rates and terms I can achieve when I am dealing directly with someone who has far less market knowledge than I do.”

Even if there was an extra cost for a tenant to use an agent – and there isn’t – you must consider the long-term savings your agent generates. Savings like these can come in many forms:

  • Decreased base rent paid thanks to your agent’s knowledge and experience
  • Skilled negotiation tactics that should create a competitive atmosphere, even if that dynamic only exists in the mind of the landlord
  • Periods added into the lease term that carry significantly less or even no base rent
  • Pre-negotiated renewal rates
  • Limited or capped operating costs
  • Terms negotiated into or out of the lease agreement that can have significant cost implications
  • Keeping the transaction on track and moving to an expedited conclusion, saving you time and worry

Now that we’ve established that hiring an agent will not affect your lease rates, you may be wondering how your agent is in fact paid. Typically, he shares a portion of the fee paid by the landlord to his own agent. This means your agent’s extensive services and expertise come at no cost to you. With that in mind, would you feel better served using a professional or negotiating directly with the landlord and his agent, both of whom complete transactions like these for a living?

If your answer is the former, we welcome the opportunity to answer your questions. Contact us directly today.

 

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About the Author

Thomas Miller, CCIM

Thomas Miller, CCIM is the president and broker of Miller Industrial Properties in Reno, Nevada. He has worked in industrial real estate since 1991, with 15 years of previous experience designing and building industrial warehousing and manufacturing facilities in the northern Nevada market. Contact Tom at tom@mipnv.com or 775-742-9891.

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