When it comes to leasing office and retail space customers have hundreds, even thousands of locations to choose from. Each location typically is represented by a broker, leasing agent, property owner etc., who makes the deal with the potential tenant.
Digging deeper, have you wondered why and how the leasing process works? And what separates the different companies you deal with when leasing an office or retail space?
Over the next six weeks, E.V. Bishoff Company will explore how "industry standard" companies (brokerage firms, third party management companies) handle their commercial real estate buildings and how "owner-operated" companies conduct business.
The first comparison to look at is leasing. Arguably the most important topic.
The Industry Norm
The Industry norm for leasing office and retail space is to pay a third-party leasing company or brokerage. These companies are hired to market and sell the available office space. Third-party agents are then paid a commission based on the amount of money a lease is valued.
This creates a problem for the customer.
First, the third-party leasing agent does exactly what is in their best financial interest as a result. This means they want more money so they will take you to the properties that pay them the most. They will do this to fatten their wallets at your expense.
Third-party leasing agents are'nt evil but they do follow the money and do exactly what our industry incentivizes. It's messed up to create an incentive that works against the tenant, but that’s exactly what our industry does.
E.V. Bishoff Company
In our company we leasing agents, or as we like to cal them - Account Executives. Our leasing sales teams are salaried employees. They are not incentivized by the size of space taken or the value of the lease their customer signs. Their job is to find the right fit.
Below is an infographic that further illustrates the differences.