9 Things Your Broker Probably Won’t Tell You

By in Office Space NYC

1. We all use the same listing service

Costar is the leading provider of building information in the United States by a wide margin. Commercial real estate brokers have a vested interest in immediately listing spaces on Costar in order to get the most coverage as quickly as possible. So, pocket listings or off market space is seldom a thing in the commercial office space market.

2. We get paid a commission based on the gross rent for the entire lease term up front

Commercial real estate brokers typically work on a commission only model and only earn a commission when their clients sign a lease. Commissions in New York are negotiable but usually range from 2.5-5% of the annual rent.

3. Most leases usually die at least once before they get signed

Signing a lease is a big decision for companies as it impacts their culture, productivity, recruiting, and profitability.  Similarly, building owners are investing a significant amount of capital into a lease including build out, free rent, commissions, legal fees, and down time. As such, it’s often difficult to get both parties on the same page. More often than not, a negotiation falls apart over minor issues than major issues.

4. We usually know about where a deal will land

In a tight market, there’s not a lot of wiggle room on the major business points of a lease. Where you might find more elasticity is on the lease terms which are equally important and costly. Additionally, often times we could trade what’s important to the landlord for what’s important to the tenant.

5. Sometimes it’s not about negotiating to save the last penny- it’s about securing the space for our clients

On a 5,000 SF space $1.00/SF is $416 per month. Sometimes the cost of not having a space or not having the right space is much greater than losing a deal for $1.00. On the flip side, sometimes its more important to secure a creditworthy subtenant than to get the highest rent. The worst thing that could happen to a sublandlord is the tenant stops paying rent so if you have to choose between a better credit tenant that’s willing to pay less, it might be the right decision.

6. We get scared when you hire an out of town attorney- or don’t hire an attorney at all

Attornies could be the most valuable member of your team if they protect you from overly harsh leases. But, they could also be a deal killer if they aren’t familiar with what’s considered standard or “market” in NYC.  For instance, you might not see a reference to your square footage in a lease in NYC. Good guy clauses or limited personal guarantees are commonplace in NYC. Owners will typically require consent if you want to sell a majority shareholding elf your business in NYC. These might not be common provisions outside of NYC but here they’re standard.

7. Coworking spaces are super expensive but sometimes it’s the right choice 

Coworking space providers like WeWork or Knotel typically charge 3x the cost for 1/3 of the space but offer the flexibility of shorter lease terms, less paperwork, and you could be up and running in days. For smaller growing companies the flexibility of lease term could be more important than cost. With hundreds of coworking providers we could help you find the right space at the right price.

8. Sometimes it’s about who you know

Relationships and trust go a long way. Brokers like to work with brokers who they know could close a deal. So, we might try to steer a client towards a deal where we know the other broker and trust that they will be straightforward and honest rather than risk our credibility with an unknown broker or from a disreputable company,

9. Experience working with companies in your industry does matter

Office space is office space right? Wrong! Different industries use office space differently and have different concerns when it comes to their space. For example, startups tend to operate at a loss, have short term planning horizons, and prefer space in locations and with environments that reflect their culture, while financials services firms prefer spaces that reflect stability, tend to allocate more square footage per person, and located in a more professional location. Using a broker that understands your industry will save everyone lots of time because they know the landlords, buildings, and spaces, that make most sense for the industry.

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Jack Cohen

Jack Cohen has over 22 years of industry experience developing and implementing real estate strategies for clients in Manhattan and throughout the United States. Prior to founding Spaces Commercial Real Estate, Jack was a Managing Director at Colliers International for 3 years and a Director at Cushman & Wakefield for 9 years. Jack’s forward thinking has engineered some of Manhattan’s most unique and difficult deals including the repositioning and leasing of 636 11th Avenue, a 564,000 RSF warehouse to office conversion, which was awarded real estates highest honor- REBNY’s Henry Hart Rice Most Ingenious Deal of the Year Award. Jack is a graduate of Rutgers University School of Business where he majored in Economics and Business Management. He is a member of the Real Estate Board of New York, the executive committee of American Israel Public Affairs Committee (AIPAC), and the Board of Education of Keter Torah, his childrens’ school. Jack lives on the Jersey Shore with his wife and three children.