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.