“You Owe Me!” said the Landlord’s Broker

Recently, in searching for a suitable property for one of our clients to lease, I spoke with a commercial real estate broker about a property he represents. I asked this landlord broker questions about the property’s size, amenities, and competitive benefits, the available space, rental pricing and offering terms, the owner, and more.  While the broker was a little less than forthcoming at the beginning of our conversation, he eventually opened up, not without some prying, and provided me with details to most of the questions I asked.

At the end of the conversation, based on the information gathered, I was able to determine whether the property would likely be of interest to my client, a company seeking to relocate its headquarters.  I thanked the landlord broker for his time and attempted to end the conversation, offering to speak with him again about my client’s needs after they’d authorized me to do so. Before I could end the call, the landlord broker shouted:

“Wait! You Owe Me!”

When I asked him what he meant, he replied by saying that because he had provided me with so much information about his landlord’s property, that in turn, I had an obligation to answer his questions about my client and its needs. Hmm!  I told him I would provide him with whatever information I could, but that I had no authority, and certainly no obligation, to do so, especially since my client instructed me to maintain strict confidentiality about them and their requirements.

The landlord broker didn’t like my response, and insisted that I was treating him unfairly.  He was serious.  This is not the first time I’ve experienced this kind of interaction.

Why do some landlord brokers think that because they provide tenant advisors with information on their properties…precisely what they were hired to do…that the tenant advisors are then obligated to disclose detailed information about their tenants’ needs?

Isn’t providing specific information the landlord broker’s job?  Isn’t that what the landlord hired him for?

What many landlord brokers fail to recognize is that tenant advisors are customers of the landlord broker.  And, like any good customer service minded professional, property brokers should treat tenant advisors with the respect that any customer deserves.

Landlord brokers are the front line salespeople for landlords. Their job is to inspire tenants and their brokers about their landlord’s property, to engage in negotiations, and to complete transactions on terms favorable to their landlords, so as to achieve their landlords’ intended ROI and other objectives.

The landlord broker’s job would certainly be easier if the tenant advisor disclosed a lot of information about its client, so the landlord broker could better determine how to satisfy the tenant’s needs. But, tenants are not always eager to disclose information for many reasons. Accordingly, they often direct their brokers not to divulge information about them.  And, that’s their right.  Despite this, some landlord brokers act as if providing property information to a tenant or its advisor is almost like doing them a favor.  I find that very odd, and a great way to turn off tenants and their advisors!

If I walked into a shoe store, asked questions about a pair of shoes, listened to the information, provided little feedback, politely said thank you, and turned to leave, would I be obligated or expected to provide a full download to the salesperson as to why I wasn’t interested?

Of course the salesperson would like to know why I chose not to make the purchase, and helping him would be the right thing to do, assuming that I was comfortable doing so. But, does that obligate me to provide such information?  Heck, no!

And, if I chose not to answer the salesperson’s questions, would it be advisable for the salesperson to demand that I answer him or berate me? Would I ever go to that store again? Would the salesperson’s boss appreciate my having been turned off to ever doing business there in the future?

From a customer service perspective, why should interactions over commercial real estate be any different?  Because greater dollar amounts are at stake? Wouldn’t that suggest a greater emphasis on customer service and relationship building with both tenant and broker, as a means of generating a basis for future opportunities?

Most landlord brokers are very professional.  Some still don’t get it.  Those that embrace a customer-service approach to promoting their landlords’ properties continually achieve the lease more space than their competitors, and highest levels of success, both for themselves and their landlords.

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.

LINKS:

RealStrat News
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Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###

Why Should I Negotiate Against Myself?

You’re going to love this one!  This landlord deserves the Self-Centered Stupidity Award!

In a recent transaction, our firm represented a well-known global company seeking to relocate its U.S. headquarters into an amount of office space that got the attention of a lot of commercial landlords.

After reviewing the local market, our tenant selected a short-list of three properties.  After receiving proposals from all three properties, our tenant decided that one landlord offered terms that not only were not competitive, but which were truly out in left field.  We agreed. This, despite our having provided all three landlords with the same request-for-proposal containing identical information, and after we provided each of them with the same guidance.

So, our tenant eliminated the non-competitive property from future consideration, and proceeded to negotiate with landlords of the other two.  After a while, the landlord of the eliminated property contacted us, expressing his extreme disappointment in his property having been removed from our tenant’s consideration. The landlord insisted that our tenant was in error, and that our tenant should have submitted a counter-proposal.  He then worked very hard to convince us that he and his property could be competitive and satisfy our tenant’s needs, if given another chance. He asked, no…practically begged, for an opportunity to get back into the competition.

After some discussion, our tenant agreed to consider a new proposal from the landlord.  When told the good news, the landlord was furious that he would not receive a proposal from our tenant. He complained, saying “Why Should I Negotiate Against Myself?”  What a jerk!

Our tenant moved on and made a deal elsewhere.

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.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###

Selling Corporate Real Estate to Speculative Investors – A Risky Game

When seeking to sell their companies’ commercial real estate, CFOs can find themselves in very risky positions when they enter into sale agreements with speculative investors. Some speculative investors don’t seek to simply purchase real estate. Instead, they use purchase agreements as leverage and opportunities to achieve other results.  This scenario may seem extreme, but it is a very common practice in how some investors acquire real estate.  Now, after such a long period of lingering economic stagnation, itchy investors eager to capture opportunity are beginning to tap into the desires of equally frustrated property owners, and are making speculative plays with their properties, often with those property owners unaware of the increased risk they bear. As chief guardian of their companies’ assets and financial interests, it is imperative that CFOs be aware of the very real risks to value erosion that can occur when dealing with speculative investors.

When selling real estate to speculative investors, landlords, or developers, it is imperative for CFOs to understand, before entering into any type of purchase agreement, option, or otherwise, the specific events that will occur between the execution of a purchase agreement and the intended closing date.  In a strong purchase agreement, the optimal transaction structure would include only a few clearly defined and achievable events intended to take place prior to closing. More importantly, the purchase agreement should contain very few contingencies that would permit the purchaser to terminate the agreement.  One of the keys to protecting the seller from the perils of doing business with a speculative investor is the payment by the purchaser at the execution of the purchase agreement of a substantial at-risk down payment. In many cases, it is unfortunate that the way many speculative investors seek to control properties often places sellers at great risk even after the purchase agreement is executed.

Very often speculative investors seek to “lock-up” a seller’s property, so that the speculative investor has beneficial control of the property for a period of months. During this time the seller usually cannot sell the property to anyone else, nor enter into a contract with another purchaser.  After speculative investors secure a purchase agreement, they often use due diligence periods to determine if their intended transaction will prove viable.  It is during this time when they should be actively pursuing municipal approvals, based on a logical and thought-out plan for the property.  Instead, during due diligence, many speculative investors often expend substantial effort to secure financial and other arrangements with development partners, investors, lenders, tenants, downstream buyers, or others.  They basically use the property and the purchase agreement as currency to uncover even greater opportunities for themselves beyond the mere purchase of the property, often extending due diligence periods when they need more time. In many cases, lock-up provisions in purchase agreements often restrict sellers from doing much anything with their properties other than maintain them and await the results achieved by the purchaser during due diligence.

When speculative investors are not successful in achieving the opportunities they seek, they often use contingencies contained in purchase agreements, or they deploy other means, including legal action, to avoid closing on the purchase. As a result, at this juncture, many speculative investors will move to terminate the purchase agreement, expect return of their down payments, and will walk away from the transaction. In such cases, speculative investors experience little, if any, financial or other loss.  By contrast, the impact on the seller can be devastating.

When a purchaser terminates a purchase agreement after many months, the seller is often left in a very challenging position, especially because the typical speculative investor will not provide the seller with a large at-risk down payment as part of the purchase agreement.  Moreover, when the above occurs, the seller will have lost valuable time, might have foregone other more favorable sale opportunities, might have missed a market peak, may be saddled with future challenges resulting from local municipal authorities who feel that their time was wasted by an unrealistic speculator and a seller who was not careful in its selection of an appropriate purchaser, and the property could take on a white elephant status in the eyes of other acquirers. This series of events then often draws bottom fisher buyers, who seek to acquire seemingly distressed properties and those owned by frustrated sellers at low prices.  This, in turn, further contributes to price erosion and creates additional challenges for the CFO seeking to dispose of the property in a reasonable time, with low cost and risk, and at a reasonable price.  In the extreme, even if the seller does not return the speculative investor’s down payment, almost any amount of security, even if forfeited, would not likely provide adequate compensation to the seller for the damages it could receive.

As in any well thought-out business endeavor, for the CFO seeking to sell his or her company’s commercial real estate, beginning with the end in mind is the prudent approach. In this type of transaction, the means of the speculative investor will dictate the end, and much more.

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.

LINKS:

RealStrat News
Biographies
Properties
What Our Clients Say

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###

Do Your Clients Really Need to See EVERY Available Property?

It is amazing that today, some commercial real estate brokers still believe that they and their clients must physically visit every building that might possibly support their clients’ needs. This remains the case in many geographic markets that are over-supplied with millions of square feet of available properties. My gosh!  Brokers forcing their tenant clients in and out of 10, 15, 20, or more buildings over an entire day or two, just seems so counter-productive!  In fact, it is!  Your clients’ time is much too valuable to waste it trudging in and out of building after building.  And, frankly, your time is equally valuable. So, why waste so much time?

By showing your clients every available property, are you really providing them great service or are you simply protecting yourself?

With the availability of technology and information at your fingertips, there exists no need to show your clients every property.

For those brokers who have not been appointed the authorized or exclusive representative of the tenant seeking to acquire a building, well, yeah, you do have to visit every property.  Because in that capacity, you don’t represent the tenant and you’re not really providing them much service.  In most states, your binding fiduciary obligations would be to yourself and/or to the property owners whose buildings you present. So, you have to show every building in order to protect your own interests.

The optimal approach to delivering service to your clients is to be formally engaged, by written agreement, and authorized to represent their real estate interests.  As your clients’ authorized representative, you should have a process that permits you to gather information about them and their business needs, so you can gain an understanding of how they wish to acquire and use real estate.  Coupled with your knowledge of your local market, you should be able to marry your clients’ needs with those properties that can best accommodate them, and eliminate those properties that don’t apply.  If you’re uncertain about whether particular properties would work, you can always provide your clients with a written or electronic report, conduct a desktop review, and together with your client select those that are best suited.

If you’re concerned about covering your tail or losing a commission, for fear that some outside broker may bring an eliminated property to your clients’ attention and that your client may forget that you’ve already presented it, or because you’re concerned that some landlord may attempt to circumvent you, there is an easy solution. Simply provide your client with a list of those properties that you eliminated along with your reasons, and offer to inspect those properties with your client at a later date, if the client wishes to see them.

In this manner, your client’s time and resources will be respected and maximized, your tail will be well covered if you feel it must be, you will provide a better service to your clients, and will drive to conclude their transactions quicker, more effectively, and more profitably for everyone.

So, NO, your clients don’t really need to see every available property!

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.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###

Commercial Real Estate Brokers: Shhh! Don’t Tell Your Tenants How Much Commission You’ll Make!

An Open Letter to Commercial Real Estate Brokers

Hey, commercial real estate brokers?  Keep your compensation a secret, even from your own clients. They don’t know how much you make, they’re too dumb to figure it out, and if you don’t bring it up they won’t think about it.  NOW, REALLY!

In most commercial real estate leasing transactions, commercial brokers representing tenants receive their compensation in the form of commissions paid by landlords.  Yep, that sure sounds like a conflict-of-interest to me!  But, unfortunately, that’s the way the industry works.

Guess what?

• Your clients can figure out your compensation…and, they will!
• Why withhold information from you own client?
• When your role is to protect your client’s interests, withholding information that they can easily figure out on their own makes you look stupid and dishonest
• Are you obligated to disclose your compensation to your clients? While you may not have any legal obligation to do so, from a moral and ethical perspective, I’m pretty sure the answer is “Yes!”

Whether or not you should disclose your compensation to your clients also begs other questions:

• Why would you want to be transparent?
• Are you concerned that someone might view your situation as your being over compensated somehow?
• Did compensation discussions take place that may have negatively affected your client?
• Is something negative going on?
• Did you have to do any favors or compromise your position (or that of your client) to secure your compensation?
• Were those favors at the expense of your client?  Did you disclose them to your client?
• What might your client have lost in exchange for the compensation you secured?
• Have you compromised your client in any way?
• Do any conflicts-of-interest now exist or did they previously exist?

If all you’re doing is getting paid, fairly and adequately, why wouldn’t you disclose your compensation to your client…the one who is the very reason for which you’re able to generate compensation?

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.

LINKS:

RealStrat News

Biographies

Articles

Properties

What Our Clients Say

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###

Exactly, How Transparent Are You?

As a commercial real estate broker, you probably consider yourself to be professional, fair, open, and honest.  Are you also transparent? Completely?  Follow these questions and comments and decide for yourself just how transparent you are and whether your clients view you the same way.

• Can you describe the basic principles behind Sarbanes-Oxley?

• Do you tell clients and prospects that you will be transparent in your dealings with them and on their behalf?

• Are you really transparent in your dealings, or is that just marketing hype?

• Do you keep your tenants and buyers informed about your dealings on their behalf and about the compensation to which you may be entitled when they complete their transaction?

• Do you only mention compensation to your tenant clients when a landlord offers you a discount, an unacceptable rate, or payment schedule that takes too long or puts you at risk?

• Do you also inform your clients when landlords offer you compensation bonuses or incentives?

• Do you disclose relationships to your clients that THEY may see as being in conflict with your ability to properly serve their interests, even if you don’t see the same conflicts?

• Are you really completely transparent?

• Are your company’s relationships so vast and geographically dispersed that it is often difficult to understand the many possible conflicts-of-interest that may exist, let alone identify and report them to your clients?
• Are you transparent with your transactional opponents and competitors?  Should you be?

Being transparent is not a buzz word, it’s an absolute, a must in business. You cannot be transparent on some issues, and not on others, and then claim to be transparent.  That’s being partially transparent, which means you’re not really transparent.  Either you’re transparent or you’re not!

Being transparent in your dealings is not that tough.  What are you afraid of?  Do you think your clients will figure out that maybe you’re not as good as you said you were?  Are you afraid that if you are transparent about your compensation that your clients may want some of it?  If you are truly concerned about this, then perhaps you should ask yourself if you really are worth what you expect to receive in compensation…if you deliver sufficient value to your clients, so that they will recognize your worth and entitlement to fair compensation.

Are you afraid to disclose that a landlord offered you a compensation bonus? Why? Do you deserve it?  Will accepting it have a negative impact on your client?  Would your client think so? Would your client be concerned that you didn’t disclose it?  If, for some silly reason, you chose not to disclose an offer of a bonus, what a tremendous opportunity you missed to build a stronger relationship with your client

If you don’t create a lot of value for your clients, if you’re merely an old-fashioned real estate space jockey, doing little more than driving your clients around the market, dropping them on a landlord’s doorstep and expecting to pick-up a check when the landlord completes your client’s deal, then you SHOULD be nervous!  While you’re still providing a service and are entitled to be paid, you’re probably not entitled to the same compensation as a true professional real estate broker or advisor who helps his/her clients plan and negotiate complex transactions and provides superior service to them.  Like in any other business, if you’re in it for a quick hit and provide minimal service and value, you should expect to be compensated in a similar fashion, and frankly, in a lesser amount than your competitors who really deliver!

Wouldn’t it be great if your clients backed you up when it came time for you to be paid?  Yours won’t?  Why not?  Could it be that you haven’t been transparent, that they don’t trust you or don’t believe that you are worth the amount of compensation you seek?  Your relationship with your clients, and how your compensation is treated, can’t be one way.  If you choose not to accept discounts, then don’t accept bonuses.  State your compensation requirements to your clients at the outset of your engagement. Inform them that you don’t accept bonuses, and neither will you accept discounts. When a landlord or seller offers you a bonus, tell them you must inform your client (that tells the opposition you can’t be bought), then tell your client!  $10 bucks says that, so long as you provide your clients with stellar service, every once in a while, your clients will let you keep those bonuses. If not, then by your transparent disclosure, it will be the best investment in your relationship with that client that you could ever make! You’ll also likely find that your clients will support you when a transactional opponent attempts to under-pay you or tries to put your compensation at an unfair risk.

If a rogue landlord attempts to force you to accept a compensation amount or structure that is less than you would ordinarily accept, advise the your client, and let the landlord know you intend to do jus that.. Many tenants won’t feel comfortable with a landlord who attempts to under-pay their real estate advisor, as they often see that as a sign that the landlord will be unfair to them, and will likely under-fund or under-deliver for them, too.  Ask your client to support your efforts to secure fair compensation.  If your client recognizes the value you’ve created for it, they’ll back you up almost every time!

Heck! Even if you don’t get to keep a landlord offered bonus, think of all the incredible goodwill you’ll create with your client, your ability to deflate the opposition’s intent on swaying your negotiating strength by “buying you off”, how much stronger you’ll be in negotiating on your client’s behalf, the additional concessions you’ll likely secure on your client’s behalf, the strengthening of your reputation, and the future credibility and additional business opportunities you’ll likely get from the client who knows he can trust you…even with cash!

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 financial 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 B. Zezas, RealStrat’s clients engage the firm when acquiring, disposing, 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.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say
AndrewZezas.com

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###

Welcome to the Men’s Room

Why commercial real estate brokers insist that tenants look at the office building men’s rooms when presenting space for relocation is a bit peculiar.

Don’t landlords know that people look at restrooms? As a result, don’t most landlords pay extra attention and keep them clean, even if they might not properly maintain other parts of their buildings?

I guess office building men’s rooms are like getting your signature notarized.  One only has a problem when you cannot get your signature notarized or when the men’s room is not clean and orderly.

Certainly, a clean men’s room should suggest the environment in which a company’s employees would work. However, is it really a true indicator of the quality of a building and how well it is maintained and managed?  What about the building’s financial circumstance and that of its landlord?

In challenging economic times where good companies work diligently to avoid financial collapse and good landlords find it difficult to attract new tenants and retain existing ones, a well-maintained building suggests that the landlord may, in fact, be focused on more than just protecting its investment. However, essential to determining the long-term viability of any potential real estate transaction is a thorough investigation of the physical condition of any property under consideration, as well as, a detailed review of the landlord’s ability to perform, not only operationally, but financially in accordance with the intended terms of a lease.

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 financial 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 B. Zezas, RealStrat’s clients engage the firm when acquiring, disposing, 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. Follow RealStrat at http://www.Twitter.com/RealStrat.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say
AndrewZezas.com

Copyright Real Estate Strategies Corporation 2011.  All Rights Reserved.

###

Always Cut Your Commission!

Yeah, that’s right!   “Always Cut Your Commission!”  And, why not?  If the only value you can offer your clients is your price, then you probably will have to cut your commissions to stay in business!

Actually, let’s clarify what is often referred to as “Commission Cutting.”  It simply means that one broker is willing to sell his or her services at a lower rate than he or she would for other projects, or perhaps in comparison to his or her competitors.  So what?  Does that mean every one in the local market must sell their services at the same price?  If you buy shoes from one store at a low price, does that mean that all of the other shoe stores will lose all of their customers and go out of business, just because you got a good deal?

Just like in other industries, there exist many common practices in commercial real estate, including those surrounding broker compensation.  But, no “standard” compensation or commission structure exists.  In fact, in most states, setting commission standards is considered price-fixing, and is illegal!

So, what’s all this noise about brokers who cut their commissions and how that supposedly affects the compensation of other brokers?  The response I often hear is that if one broker offers low-priced services then every landlord, tenant, buyer, and seller in that market will make the same demands.  Really?  Well, guess what?  They already want your services at the lowest possible price.  Shouldn’t they?  Don’t you want to buy those shoes as inexpensively as possible?  Don’t you negotiate for a lower price when you buy or lease a car?  Didn’t you negotiate when you bought your home?  Did everyone else get their home for the same price you did?  Of course not!  Seeking a lower price is the American way, and there isn’t a darned thing wrong with it.

Ask yourself these questions:

• Are you a low-cost service provider?
• Is low-cost always the winner?

NO!  If that were true, there would not exist high-priced hotels, restaurants, resorts, clothes, homes, cars, etc., etc., etc., or anything of better quality.  If low price always won, consumers and businesses would never buy the best quality or engage the best of any service provider.  Instead, they would only hire the cheapest.  And, in those instances, they’d get what they paid for.

Forget what other brokers do.  There is plenty of room in every industry for low-cost service providers, because some clients do make purchasing and hiring decisions purely on cost.  Low cost, almost always means low quality, and those who hire only on a low-cost basis typically receive services commensurate with what they pay.  And, if that’s their preference, so be it!

The answer here is very simple:  If you are a low-cost service provider, be the best one in your market.  If, on the other hand, you wish to be something other than low-cost, make sure that like Mercedes, BMW, Nobu, Gucci, and other fine products and service providers, you provide your clients with such incredibly valuable services, experiences, and outcomes, that your other-than-low-price will be warranted and you will be in demand!

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 financial 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 B. Zezas, RealStrat’s clients engage the firm when acquiring, disposing, 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.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say
AndrewZezas.com

For additional profiles, pictures, and more click here or go to http://realstratnews.wordpress.com/media-information/.

Copyright Real Estate Strategies Corporation 2011. All Rights Reserved.

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Want to Know More About Customer Service? Rent a Car!

How many commercial landlords incorrectly consider themselves to be in the real estate business?  How many real estate brokers assume they’re in the business of leasing or selling properties?  They’re all wrong!  From a customer service perspective, both parts of the commercial real estate industry could take direction from the car rental business!

Recently, I flew to Oklahoma on business.  Prior to my flight, I arranged for a rental car to be available.  Since I had combined two business trips into one, I flew in from another city that required indirect flights.  So, after traveling all day long, when I finally landed late that night, the last thing I wanted was anything more that would keep me from getting some sleep.

As I got off the place, I walked through the terminal and arrived at the car rental area.  When I approached the car rental counter, I found a young man sitting behind the desk quietly with a smile on his face.  It was almost midnight, so the car rental area, and the airport itself, were both pretty quiet.  I dropped my bags and said: “I’m Andrew Zezas…I believe you have a car waiting for me?”  The smiley service representative stood up, said: “Good evening, Mr. Zezas. Your car is ready!”  He proceeded to give me very precise directions to the elevator that would take me to my car.  I picked up my bags, followed his directions, and when the elevators opened, I stepped off and saw the their booth just a few step in front of me.  I walked up to the booth and opened my mouth to speak, when the attendant said: “You must be Mr. Zezas!  Your car is right here.”  13 feet away from where I was standing was a just cleaned sparkling sedan with the engine idling, ready to take me to my hotel.  The attendant handed me my paperwork, and in what seemed like little more than 30 second, my bags were in the trunk, I met up with my colleague, and we were driving out of the airport.  How cool was that?  Sleep was only a short drive away!

Before I pulled off the airport property, a sensor on the dashboard told me that pressure in one of the tires was very low.  So, my colleague and I immediately returned to the rental booth.  I figured, sleep might have to wait a while.  The attendant saw us pull in and, before he even knew what the problem was, he couldn’t apologize enough.  He asked me how he could make up to us the terrible inconvenience his company had caused us.  Was he kidding?  Terrible inconvenience?  We drove for all of 87 seconds!  What terrible inconvenience?  This guy really meant it!  He couldn’t stop apologizing.

The attendant walked into his booth, and in under 3 minutes came out with keys to a brand spankin’ new SUV.  He said: “We’ve upgraded you two levels, as our way of apologizing.  Your car is right over there”.   Wow!  I walked over to the SUV, threw my bags in the back, and was overwhelmed with that new car smell that I can never get enough of.  When my colleague and I looked down at the dash, we both saw something neither of us had ever seen before.  Now, mind you, we each have been driving for more than 30 years.  What we saw amazed us.  The odometer read….3!  Not 300, not 3,000….just 3, little old miles.  This shiny, wonderful smelling, free upgraded SUV, had only been driven out of the factory, onto the trailer, and into the rental parking lot.  It had basically never been driven by anyone else other than the guys who built it and delivered it.  And, I would be the first!  Now, that was cool!

So, let’s count the surprises:

1. Smiley greeting at the counter

2. Greeting at the booth, which ws easy to find and close by

3. Car waiting next to the booth

4. 10 or 20 apologies

5. Under 3 minute car replacement

6. Free upgrade to a much larger and more comfortable vehicle

7. And, a vehicle that, if it was any newer, it would still be still steel ingots and petroleum!

Now, that’s what I call customer service!  You think I’ll rent from that company again?  You think I’ve told this story a bunch of times, and have encouraged my colleagues, clients, family, and friends to rent from them?  You think word of mouth travels fast?  You bet!

Landlords and brokers, errors happen in transactions and when providing service all the time.  Some are simple, honest mistakes, and others are major screw-ups, or worse.  When was the last time you provided seven surprises as a way of making your tenants and clients feel like they wouldn’t want to do business with anyone else ever again?

Send me your thoughts.

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 financial 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 B. Zezas, RealStrat’s clients engage the firm when acquiring, disposing, 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.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say
AndrewZezas.com

For additional profiles, pictures, and more click here or go to http://realstratnews.wordpress.com/media-information/.

Copyright Real Estate Strategies Corporation 2011. All Rights Reserved.

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Do Corporate Tenant Real Estate Advisors Go Too Far?

Do corporate tenant real estate advisors go too far?  Some landlords think that those real estate professionals who advise corporate tenants, often over-negotiate lease transactions on behalf of their tenants.

Is this just sour grapes? Is it  because landlords don’t like negotiating with tenant advisors who understand the commercial real estate game and put money back into the pockets of their corporate tenant clients?  Is this because landlords don’t like the idea of paying commissions to tenant advisors who negotiate against them? Or, is there truth to this…that corporate tenant real estate advisors really do go too far when negotiating leases for their clients?

What is going too far, really?  Is it too far when a tenant seeks more than a landlord would prefer to give…more free rent, rent discounts, construction allowances, flexibility, options and rights, favorable terms, or otherwise?  Is it too far when a tenant directs its advisor to negotiate certain terms the landlord may not like?  Is it too far when a tenant advisor does all he / she can to achieve the best terms for his / her client?

When landlords feel that tenant advisors go too far, could this really be more a matter of market conditions?  If a landlord’s competitors will not support the terms a tenant seeks, can that tenant realistically expect to achieve such goals? Not likely.

I’ve heard some landlords complain that tenant advisors unfairly fill the heads of executives with the idea that corporate tenants are entitled to all kinds of goodies when negotiating leases.  They often say that this practice is unreasonable, as it makes negotiations difficult for landlords.

Note to commercial landlords: The role of tenant advisors is not to make transactions easy for landlords…nor, is it to make transactions difficult for landlords.  In fact, the tenant advisor’s role is to enhance and protect the interests of its corporate tenant clients by understanding their business objectives and to recommend transaction strategies and structures that would support them.  The tenant advisor’s role is also to negotiate aggressively to secure as much for the tenant as possible.  Seasoned tenant advisors understand the limits after which they might put their transactional opponent landlords in danger or even jeopardize a transaction.

Just like how the role of landlord advisors is to work to benefit landlords, the job of the tenant advisor is clearly defined.  When a tenant advisor makes demands that a landlord finds too great, perhaps it simply means that the particular transaction just isn’t right for that landlord.

At times when supply is low and demand is high…in markets that are favorable to landlords, do tenant advisors still go too far?  In those markets, I rarely hear such complaints.  When the odds are stacked in favor of landlords, how far would be too far for “landlord” brokers to go?

Do some corporate tenant advisors go too far? I’ll answer that question this way:  Is this really an indictment of all tenant advisors?  Do some landlords and landlord brokers go too far?

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 financial 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 B. Zezas, RealStrat’s clients engage the firm when acquiring, disposing, 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.

LINKS:

RealStrat News
Biographies
Articles
Properties
What Our Clients Say
AndrewZezas.com

For additional profiles, pictures, and more click here or go to http://realstratnews.wordpress.com/media-information/.

Copyright Real Estate Strategies Corporation 2011. All Rights Reserved.

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