Why Hire a Tenant Rep Broker
October 20, 2021
By: Drew Altmann

For the better part of commercial real estate history, landlords and sellers were the only parties in a transaction with representation by a real estate professional. Users of space, like tenants and buyers, went unrepresented in negotiations and often paid a high price. This created a glaringly obvious conflict of interest in that the user’s agent also represented the property owner and tenants were left wondering if anyone had their best interests in mind.

This phenomenon led to an overhaul of the brokerage industry, as tenant representation took root in corporate America and is now recognized as a specialized sector of commercial brokerage. The tenant representative concept came about to avoid conflicts of interest while leveling the playing field and providing the most favorable negotiation terms to the user. Tenant representatives are industry experts that companies of all sizes utilize to ensure they are getting the best possible deal that aligns with their business goals. These representatives create a balance of power in addressing their clients’ real estate needs by applying market knowledge, industry relationships and competency as licensed professionals to create a more competitive negotiation environment. In Texas, real estate brokers are considered fiduciaries, which means they must treat the needs and interests of the client as their own.

Market knowledge is a key factor when considering a tenant rep broker. This knowledge can provide leverage in negotiations, save you time and create competition among your potential real estate options. Tenant representatives should understand the differences between what a landlord is asking for and what a landlord will ultimately agree to, which is useful especially when negotiating leases. Understanding the local market is imperative given the ever-changing nature of the local economy, lease rates, building standards, etc. For example, the Houston office market is currently very tenant-friendly as a result of the COVID-19 pandemic and a massive energy downturn. This has driven asking rates down as overall vacancy continues to rise and landlords are in turn more willing to negotiate.

Most tenant representatives have built long term relationships with landlords and landlord representatives over the course of their careers. This is another key asset provided by a tenant rep broker which can be very useful to a tenant in many ways, such as comparable deal information leveraged, off-market listings or simply a more intimate knowledge of particular building ownership and their willingness to negotiate.   

In general, the process of executing a real estate transaction can be complicated and involved. Tenant representatives are licensed professionals with expertise and experience that will ultimately fight to minimize the tenant’s risk, occupancy cost and time spent through the process, benefiting both the real estate transaction at hand and their business overall.