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3 Pillars of Success in Commercial Real Estate

Over the years, we’ve shared lots of educational content, because we’ve learned educated commercial tenants and buyers make the best decisions for their businesses.

And if one were to take anything away from it all – these 3 pillars are the key to success for our clients winning a good deal for their businesses.

#1. TIMING

Timing the process perfectly drastically widens the path to success, because with the proper amount of time allowed, a business owner can find the perfect balance of competitive offers and not feel rushed when making a very important business decision.

Too Early

Starting the process too early may cause the landlord or seller to either propose an unfavorable offer to a business owner or just simply decide they are not ready to negotiate yet, despite spending lots of valuable hours evaluating the market. They do this, because they know there is still plenty of time and do not feel any pressure yet.

Too Late

More often, the issue with timing is beginning too late. Unlike residential transactions, commercial transactions take several months from start to finish. If not enough time is available to work with, the business owner may feel backed into a corner, either settling for a property they are not particularly excited about or being forced to pay much more in rent or give up important concessions. The more viable options available for a business owner, the more picky they can be to hold out for the perfect space and the perfect deal.

Just Right

Timing the first step too early is preferred over being too late, but there is a sweet spot to provide the most amount of leverage. Business owners should begin most transactions – including new locations and relocations – 10-12 months prior to the target move-in date. However, for ground-up construction, the process should start 12-18 months in advance.

#2. POSTURE

The key to creating a strong posture, which will lead to the business owner to be taken seriously and offered competitive terms is by truly considering all the viable options in the market with each real estate opportunity.

The fact is, property owners and landlords will only offer favorable terms if they know the business owner can and will go elsewhere. If the business owner is only set on one option, why would they need to be persuaded?

Additionally, multiple options provides insurance to the business owner. In other words, circumstances may come up later on during the process that cause the deal to fall through. Sometimes architects discover a buildout is not feasible or is much more expensive, or sometimes a property owner reveals to be impossible to work with, so if a business owner has another opportunity as a back-up option, they will be in much better shape. They will not need to start from the beginning and lose valuable time if they can simply just move forward with option B instead of option A.

#3. REPRESENTATION

Hiring a commercial real estate agent will not only elevate a business owner’s posture, but they will simplify their path to success.

A commercial agent not only advocates for their client’s best interest, but they quarterback the entire transaction – from start to finish. Business owners are experts in their own fields with their own jobs to do. Business owners are not commercial real estate professionals and do not have the extra time to dedicate to mastering the trade.

Commercial real estate agents are seasoned negotiators and market experts. They know how to strategize for each unique situation to create the most leverage and achieve the best outcome.

Real estate is often the second or third highest line item in a business’s budget, and each transaction is worth tens to hundreds of thousands – or even millions – of dollars with a lasting impact on that budget for several years.

With so much at stake, business owners need to dedicate a lot of time and energy to each real estate opportunity, and by hiring a good commercial agent to lead the way, they can be assured they are aligning themselves with an expert to help them make the best decisions for their business.

Commercial and residential real estate transactions are very different. Not only are commercial buildings physically built differently, but the entire transaction process is much more lengthy with different standards, including the various documents and parties involved. Therefore, business owners need to hire commercial agents for their commercial transactions.

Furthermore, not all commercial agents specialize in every type of transaction. Agents who call themselves tenant representatives specifically work for business owners – as opposed to landlords or sellers. This exclusivity eliminates any conflicts of interest, because tenant representatives do not take any listings and are therefore not bias towards any properties.

Business owners should not be afraid to interview multiple agents when determining who is the best suited to represent them. A business owner can start by asking trusted colleagues or business partners for referrals, and if they can find commercial agents who are tenant representatives who strictly only represent tenants and buyers, that is a huge bonus.

But like with residential transactions, commercial tenants and buyers do not pay for their own agent’s commission fees. Instead, commercial landlords and sellers set aside funds for each listing to split between both agents involved with the transaction – both their own agent and the other party’s agent. In other words, the landlord or seller is paying all commission fees for the transaction.

All of this means, business owners do not save any money by tackling their real estate transactions alone. Instead, they only expose themselves to making costly mistakes.

Feel free to share this downloadable PDF handout with anyone who may find it helpful.

This information – along with other tips we’ve shared this year – is part of a larger guide we created for people like our clients – The Essential Guide For Commercial Tenants and Buyers.