Frequently Asked Questions about GPP and our Commercial Real Estate Services
Why would a company need tenant representation? How can an experienced advisor give you an advantage at the negotiating table, even if you're simply renewing a lease? These answers and more from Gannett Peak Partners (GPP). Still have questions? Drop us a note and we'll contact you with the answer right away.
Q: WHY DO I NEED TENANT REPRESENTATION?
A: For the same reason you would not have an attorney representing both parties in a legal manner. In commercial real estate negotiations, each party should be represented by its own broker— preferably, one that thoroughly understands their party's needs and concerns.
Q: WE DON'T WANT TO MOVE AND INTEND TO RENEW OUR LEASE.
A: Even in this case, you can still benefit from the commercial real estate expertise of Gannett Peak Partners. Here's why:
The key to a successful renewal negotiation is creating competition between your current landlord and surrounding landlords in the area, while maintaining a controlled and organized process.
Landlords hire professional leasing agents to negotiate the highest returns for the investment in their building. If the agent or landlord can sign a tenant at a higher rate, it improves the landlord's bottom line.
Tenants gain leverage at the negotiations table by using an experienced advisor with proper market research and negotiating skill. In this way, a tenant representation broker can save you significant amounts of time and money on lease renewals.
GPP understands you don't want to damage your relationship with the landlord, which is why we deal with every landlord in an aggressive, yet fair and professional manner.
Q: HOW IS A TENANT REPRESENTATIVE COMPENSATED?
A: Tenant representatives are compensated by the landlord. The landlord pays their listing agent a fee and the listing agent shares that fee with the tenant representative.
If you don't have representation, the landlord will pay the entire fee to the listing agent, whose job and fiduciary obligations are to get the best possible terms for his principal -- the landlord.
A tenant representative's job and fiduciary obligation are to get the best possible terms for the client, aka tenant.
Q: WHAT'S THE MOST COMMON MISTAKE A TENANT MAKES WHEN NEGOTIATING A LEASE ON THEIR OWN?
A: The biggest mistake a tenant makes is not developing legitimate alternatives to their first choice, whether they renew their lease or relocate.
Here's why: landlords watch your actions and can quickly see that you don’t intend to move. At that point, you've lost all negotiating leverage.
Even tenants who have no reason to move must develop alternatives to their current space, otherwise they risk paying above market rents needlessly, because they forfeit all leverage in negotiating the terms of their renewal.
Q: HOW MUCH TIME DO I NEED?
A: Market conditions, the size and complexity of the transaction, and option notice dates all help determine when to begin the process of evaluating your lease.
Time should be your ally, not your enemy during negotiations with any landlord. Landlords know that other buildings you're considering will require you to complete a space plan, get construction pricing, agree on a rental rate, prepare and execute a lease document and apply for construction permits and prepare the space for occupancy - this is typically a 4 to 6 month process.
As discussed in the previous question and answer, a tenant who waits until the lease term is down to 6 months or less before asking the landlord for a lease renewal proposal is telling the landlord that it is not considering any other options. Depending on the size and complexity of your space requirement you should allow, at a minimum, the following lead times to negotiate your office lease:
1,000 - 3,000 SF
4 - 6 months
3,000 - 10,000 SF
6 - 10 months
10,000 - 20,000 SF
8 months - 1 year
Up to 2 yrs in advance
Q: HOW MUCH SPACE SHOULD I LEASE?
A: Before you even start looking, the first step in the office space leasing process is to determine the amount of space you need. A general rule of thumb is to lease 200 to 250 SF per person. However, this amount can vary greatly so it may be important to prepare a space plan program.
Q: WHY GANNET PEAK PARTNERS?
A: GPP has built a reputation in Minnesota — specifically Minneapolis and St. Paul and their surrounding suburbs—as a powerful tenant representative and corporate real estate advisor. Consequently, your financial and business goals are all that matter to us.
Q: HOW DO I GET STARTED?
A: Gannett Peak Partners can help you get started by determining your office or industrial needs, reviewing current market conditions and obtaining a list of all available properties that meet your needs. Call Philip J. Kluesner, Managing Partner, at 952.224.1700 to begin the process.
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