If I Use an Industrial Real Estate Agent, Will My Lease Cost More?0

Posted by Thomas Miller, CCIM

stoppingMany months ago, we ran a series about industrial real estate myths, during which we debunked common beliefs relating to industrial real estate. One of the more persistent misconceptions is a version of this statement: “Using an industrial real estate agent will raise the cost of my lease.”

If you’ve heard this, it’s probable that you’re a prospective tenant and you heard it from a landlord. The real meaning is this: “I don’t want you to use a professional agent because they know too much about the market. I prefer to deal directly with the potential tenant, who probably has far less market knowledge than me.”

The truth is that using an industrial agent to negotiate your new warehouse property or what have you will most certainly not cost you more in terms of your lease rates. And even if it did, it’s likely that those costs would be worth it when you consider the long-term savings a competent agent will generate for you. These can include:

  • Decreased base rent paid as a result of  your agent’s knowledge and experience
  • Skilled negotiation tactics that 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
  • Capped or limited operating costs
  • Terms negotiated into or out of the lease agreement that may have significant cost implications
  • Keeping the transaction on track and moving to an expedited conclusion, saving you both time and worry

Understanding that your agent won’t affect your rates is important, but perhaps it leaves you wondering how in fact your agent is paid. In most instances, your agent will share a portion of the fee that the landlord pays to his own agent. And that means your agent’s extensive services and expertise – all of which will benefit you greatly –  come at no cost to you. Ask yourself whether you’d feel better served using a professional or whether you prefer negotiating directly with the landlord and his agent, keeping in mind that both of whom complete transactions like these for a living.

If you see the value of experience on your side of the negotiation table, we welcome the opportunity to answer your questions. Contact us directly today.

Our posts are intended to educate commercial real estate users so they can make better decisions in their real estate use, investments, buying and selling. We encourage your input and commentary. If you are enjoying these posts and finding them useful, help spread the word via Facebook, Twitter, LinkedIn, Google + or email with the buttons above.

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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