There are literally dozens of variations of commercial leases; full service, gross, modified gross, NNN, NN, absolute net...you get the idea. We will get into leases at a later date; but they are just one of the reasons you need to have a commercial real estate broker on your side when looking for space, negotiating a lease, or purchasing/selling commercial property.
Let me answer the first question most commercial brokers get asked when working with a client for the first time..."How do you (the realtor) get paid?" While each case can be different, depending on the circumstances, in the Knoxville market it is standard business practice for the landlord to pay the commissions in a lease. Hence, it doesn't cost the broker's client (the tenant) a dime to look for space. Commissions for property sales are similar to residential practices in that they are negotiated in the sale contract.
In the eyes of the state of Tennessee, and national groups like REALTOR, there is no difference between a commercial realtor and a residential realtor. We all have the same licenses and took the same classes; it’s what we do with the license after it is earned that makes the difference. Many commercial realtors earn designations that help educate them on marketing properties, helping clients make decisions on proper investments and the like. Some you may have seen include CCIM (Certified Commercial Investment Manager); SIOR (Society of Industrial and Office Realtors) and CPM (Certified Property Manager). These realtors have spent hundreds of hours in courses, and years in the field, to prepare them to meet their client's needs.
Two of the biggest reasons to use a commercial realtor are time and experience.
Time is the one thing always seems to come up short. Instead of spending your day driving around town looking for space that might be available (and hopefully in your price range) commercial broker have market knowledge and multiple interactive data bases at their fingertips to steer you in the right direction. Say you want office space in west Knoxville; within minutes a commercial realtor can tell you what is available in that area, what it costs and the type of development in which the office is located. The same can be said for retail and industrial space. This way you can spend 15 minutes narrowing the list of potential spaces instead of three hours just trying to find out what is available and tracking down phone numbers.
Commercial broker experience is what saves you money! Any broker worth his salt will know the important details you need to help you make an informed decision. Is this a new building? If so, what kind of tenant improvement allowance will be included? Is the rent abnormally high for the market and the economy (boy, does that really play a part now)? What other kind of leasing incentives might the landlord provide? Should you lease or buy?
Commercial brokers will also have the experience to walk you through a lease (although most realtors are not lawyers and any lease should be reviewed by legal counsel prior to signing) to explain things like; force majeure, estoppel, operating expenses etc...
On the other side of the ledger, property owners can use the expertise of commercial realtors in much the same way. Instead of spending your precious time looking for a tenant for your empty building a broker does it for you. Commercial brokers are able to market the space via local and national data bases (basically a commercial multiple listing service), they can market the space through signage on the property and most importantly they talk to other brokers every day. It helps them keep the pulse of the market; who is looking and how much space are they looking for.
Commercial brokers can also help keep you apprised of market conditions. Brokers are familiar with competing properties. They know who is moving, who is downsizing, how needs to expand. And a good broker knows what buildings are giving away the farm to find a tenant. Commercial brokers are paid to know this information.
Also important to owners is disposition of the
property. Better described as “What
are you going to put in your pocket when you sell?”. There is an entire CCIM course related to
these transactions. How should you price
your property? What kind of
capitalization rates (cap rate) can the market withstand? What tax implications
do you have when you sell it?
Experienced commercial brokers can walk you thru all these steps.
There are many more details that we can get into regarding
commercial brokers. The items above are
strong evidence that an experienced broker is imperative to the success of your
property search or ownership.
Cushman & Wakefield works on transactions like this
every day. The biggest office and retail deals in Knoxville have been handled
by nine brokers in our office. Allow
Cushman & Wakefield | Cornerstone help drive your next search.
