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Myths About Leasing Commercial Real Estate
Today's Tenant Rep Tuesday Tip topic: Myths About Leasing Commercial Real Estate
Tenants have been leasing commercial real estate for a number of year years now, however there still seems to be many myths or misunderstandings about the process works.
Here are a few common misconceptions that tenants have about renting commercial real estate.
- It's Only About Getting the Lowest Lease Rate – While getting the lowest lease rate possible is a component of the negotiations, tenants should focus on the total occupancy cost over the lease term. Tenants need to factor in other concessions such as free rent, tenant improvement allowances, age and class of building, amenities, and operating expenses.
- I Can Find Space on My Own on the Internet – This is partially true. These days there are over 10 different websites that list commercial properties for lease, however many of the spaces advertised have already been leased, the data is not complete, inaccurate, or outdated, etc. In some cases the data is misleading. In a hot market, most of the best spaces get leased before they make it to those websites. If you are only looking on the internet for available commercial space then you are missing a lot of great options.
- Commercial Real Estate Agents Are Expensive – Many tenants don't understand that when you hire a commercial real estate agent to represent you in finding and negotiating space their fee is paid for by the landlord, however they are legally obligated to represent your best interests as a tenant. The question is, do you know how to negotiate commercial leases to get the best deal. Using a commercial broker to help you does not have a negative impact on your deal, in fact they know the market and can help you save time and money.
- Commercial Brokers Don't Care About My Company Needs – A good commercial real estate agent that represents tenants only is going to listen to your current and future business needs while helping you find commercial space and negotiating a deal that makes business sense. They only get paid when a lease is signed so they have an incentive to see things through. The landlord's agent has the fiduciary duty to adhere primarily to the landlords needs.
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