When it comes to buying or leasing a commercial property, working with a skilled and experienced commercial real estate broker can be incredibly beneficial. A good broker that specializes in tenant representation can help you find the right property, negotiate the best deal, and guide you through the process from start to finish. However, not all brokers are created equal, so it's important to ask the right questions to ensure you choose the best broker for your needs.
Questions To Ask When Interviewing a Real Estate Broker
The first set of questions to ask a commercial real estate broker should focus on their experience and qualifications.
1. How Long Have You Been Working in Commercial Real Estate?
You want to work with a broker who has been in the business for a while and has a track record of success. Ask how long they have been working in commercial real estate, If you are a small business a lot of large brokerage firms will pass you on to less experienced agents. You want to work with a commercial realtor with as much experience as possible so you might consider a smaller boutique commercial real estate company.
2. What Types of Commercial Properties Do You Specialize In?
There are many different types of commercial real estate such as office, retail, warehouse, multifamily, etc. You want to work with an agent that is an expert in the type of real estate you need and be familiar with specific neighborhoods. If the city you want to lease commercial space in is small than the broker will likely be knowledgeable about many types of real estate and be knowledgeable about all the neighborhoods. If the broker specializes in one niche such as Industrial space you may find them knowledgeable about multiple markets.
3. Do You Have References From Past Clients?
You should also ask for references from past clients so you can get a sense of their reputation and the level of service they provide. This will also give you a sense of what types of transactions they have done and how they communicate with clients.
4. What is Your Process For Helping Clients Find and Evaluate Properties?
What software do they use if any? Do they call all the landlords and landlord agents on your behalf? Are they also driving around to ensure they don't miss anything? Do they look at demographics to find locations with good traffic patterns, incomes, and populations that meet your target audience?
5. How Do You Handle Negotiations and the Offer Process?
It's important that you understand the commercial lease negotiation process as it always takes longer than you think. Having them give you an overview of the process once your favorite space has been identified will set your expectations and enable you to budget your time accordingly.
Once the best spaces have been identified most good brokers will then draft letters of intent or request for proposals. After getting responses from the landlords they will then assist you in getting preliminary bids to determine total estimated costs. Then you will be armed with the information you need to counter the landlords and negotiate the best deal possible.
6. What Resources Do You Have Available To Assist With Due Diligence?
Most commercial lease transactions are going to require some sort of due diligence. For example if leasing a free standing single tenant building you would want to have it inspected since you would ultimately be responsible for all repairs and maintenance. If a space is in bad shape and needs renovating and the landlord offers a tenant improvement allowance you need to get preliminary construction estimates to know how much it will cost.
When negotiating most commercial leases you will end up working with space planners, architects, contractors, real estate attorneys, data cabling and furniture vendors, etc. A good commercial real estate broker can introduce you to ones that they have good success with.
7. How Do You Communicate With Clients and Keep Them Informed Throughout the Process?
You want to work with a broker who is organized, efficient, and communicative. Ask them how they will communicate with you while identifying and searching for spaces, during negotiations with the landlord, and while the space is being prepared for occupancy. Do they prefer you communicate via email, mobile phone, Skype, etc?
8. What is the State of the Local Commercial Real Estate Market?
If the broker is not willing to share market information without you first signing a representation agreement then turn the other way. There are some out there like that. A good commercial realtor should be transparent and share what they know about the local commercial real estate market including key trends and drivers. It's important that they know the market well and keep a pulse on it at all times. With their support and knowledge you will be better equipped to make great business real estate decisions.
9. What Areas or Neighborhoods Should Be Considered For Commercial Property?
What Areas or Neighborhoods specific areas or neighborhoods that may be good options for a commercial property, as well as typical lease terms and rental rates in the area. A good broker should have a deep understanding of the local market and be able to provide valuable insights and advice.
They should be able to give you an overview on all the neighborhoods around town that have the type of property you are looking for. What types of businesses currently rent commercial space in these areas. Are the neighborhoods safe for your employees and visitors? What types of properties are typically found in certain areas of town? You want to learn about and find the locations that have the demographics, traffic patterns, and income levels that meet your business needs.
10. What Do You Need From Me Before We Get Started in the Search?
It's probably a good idea that you sign a representation agreement with your chosen agent. By having the assurance that you are only working with them they will jump into your project with both feet and put as much time and resources needed to find the best spaces and negotiate the best deal possible on your behalf.
Also, with all real estate transactions landlords will want to see your financials (e.g. profit and loss statements, balance sheets), business plan, any bank loan approvals, etc. The more of this information that you have prepared up front the more landlords will take you seriously and the faster the leasing process will go.
11. How Much Do You Charge For Your Services?
Most tenant representatives don't (or shouldn't) charge for their services because landlords pay brokerage fees in commercial real estate deals. Just like in residential real estate where you hired an agent to find a home for you and didn't pay a fee. You don't pay commercial brokers to find commercial space for lease. Their service is free to you which is why there should be no reason for you to NOT hire one.
12. How Long Does it Take to Find Commercial Property For Lease and Negotiate?
We always suggest that tenants start the process at least 6-8 months before their ideal move in date or before their existing lease expiration date. Obviously it can happen sooner under all the right conditions however in most cases commercial spaces are going to need improvements such as new flooring, demolition, new walls, etc.
In conclusion, choosing the right commercial real estate broker can make a big difference in your search for a new property. Be sure to ask the right questions to ensure you find a broker who is experienced, knowledgeable, and has a proven track record of success. With the right broker on your side, you can feel confident in your decision and move forward with your commercial real estate plans.