Tenant Representative…Is that really the correct name for what I do?

Tenant Representative…Is that really the correct name for what I do?

For years I’ve been called a tenant representative.  That’s a prevalent term used by many in commercial real estate.  Tenant representatives are most often defined as real estate professionals, advisors, and brokers, who only represent the real estate interests of commercial tenants.  Full-time tenant representatives don’t typically represent landlords or others who are in the business of real estate. Tenant representatives prefer to remain on one side of the transactional equation, most often for the purpose of transparently representing the interests of their commercial clients, so as to minimize the probability that they might become embroiled in a conflict-of-interest.

Some full-service real estate professionals, those who offer services to tenants, landlords, investors, developers, buyers, sellers, sublandlords, subtenants, and others, claim to provide tenant representation as one of their often very large bundles of service offerings.

When it comes to avoiding conflicts of interest, I’m not quite sure how full-service real estate professionals can truly be transparent and protect their clients.  The myth of the existence of so called “Chinese Walls” in real estate brokerage companies is a total joke.  I’ve never seen one such company that keeps tenant representatives in a separate building from their landlord brokers, or one that maintains separate databases not accessible by the other side.  In fact, in most states, the senior real estate licensee of the company is responsible for all transactions completed by that company.  So, how can one individual be responsible for both tenant representation and full service engagements while, at the same time, remaining transparent and balanced, and avoiding conflicts-of-interest for the company’s clients?  But, that’s an entirely different story!

The issue here is whether or not the term “Tenant Representative” is accurate.  The word “Tenant” refers to a lease by an occupant for property owned by a landlord. Many companies consider leasing vs buying.  With recent prices for commercial real estate as low as they have been lately, many companies are asking if they show own or lease.  Furthermore, if changes in lease accounting rules  proposed by the Financial Accounting Standards Board and the International Accounting Standards Board are passed (many expect those rules will be passed), the financial reporting differences between leasing and owning will almost be eliminated. So, even more companies will likely consider ownership over leasing in the near term.

Considering that the role of a real estate professional is to advise his or her clients about opportunities to achieve their real estate and business objectives, don’t most tenant representatives help their clients compare leasing to owning real estate?  And, don’t some of those clients purchase real estate instead of leasing?  When a company owns real estate, are they a tenant?  So, does the term “Tenant Representative” accurately apply?

Introducing….”Commercial Occupant Representatives”…at your service!  Does that work?

About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to finance and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations.  Under the leadership of its award-winning CEO, Andrew Zezas, RealStrat’s clients engage the firm when acquiring, disposing of, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America.  By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.

In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate.  The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery.  Visit www.RealStrat.com. Read about timely commercial real estate issues at RealStrat’s blog at www.CorporateAdvisor.wordpress.com. Follow RealStrat at http://www.Twitter.com/RealStrat.

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THIS WORK IS DESIGNED TO PROVIDE PRACTICAL AND USEFUL INFORMATION ON THE SUBJECT MATTER COVERED AND REPRESENTS THE OPINION OF THE AUTHOR. HOWEVER, IT IS PROVIDED WITH THE UNDERSTANDING THAT THE AUTHOR IS NOT ENGAGED IN RENDERING LEGAL, FINANCIAL, ACCOUNTING, OR OTHER PROFESSIONAL ADVICE TO THE READER. IF LEGAL, FINANCIAL, ACCOUNTING, OR OTHER PROFESSIONAL ADVICE IS REQUIRED, THE SERVICES OF A COMPETENT PROFESSIONAL SHOULD BE SOUGHT. THE AUTHOR SPECIFICALLY AND EXPRESSLY DISCLAIMS ANY LIABILITY THAT MAY BE INCURRED AS A RESULT OF THE USE OR APPLICATION OF THE INFORMATION THAT IS CONTAINED IN THIS WORK.

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