When people look for a home, one of the first things they do is hire a residential realtor. But when it comes to commercial real estate, some newer tenants and investors try to represent themselves when looking for commercial space. That’s almost always a big mistake.
In this article, we’ll look at the benefits of listing commercial real estate with a broker, how to find the best broker in your market, and six key questions to ask before hiring a commercial broker.
Benefits of Hiring a Commercial Real Estate Broker
A commercial real estate broker works with property owners and tenants to buy, sell, and lease real estate for commercial use. Compared to buying a home, where a lot of emotion is involved, a commercial agent understands that investment real estate is mainly a numbers game. The top benefits of hiring a skilled commercial real estate broker in your local market include:
- In-depth market knowledge to find the best commercial property for sale, including properties just coming to market.
- They represent both buyers and sellers of commercial real estate – and tenants seeking to lease or sublease space – while always keeping the client’s best interest in mind.
- Hiring a commercial broker is cost-effective for CRE investors and tenants because the seller or landlord normally pays fees instead of the client.
- Access to commercial listing sites to quickly lease space by generating as much demand as possible from qualified tenants.
- Posting available commercial property for sale on the top commercial real estate websites ensures the property is seen quickly by as many buyers as possible.
- Networking with other commercial agents and local real estate experts helps locate hard-to-find property and allows investors and tenants to get the best deals on the market today.
- Help clients to stay objective and focused, calmly explaining and exploring all options of a commercial real estate transaction without tipping their hand to the other parties in the deal.
- Commercial real estate brokers also save clients time and money by doing the legwork to find opportunistic properties to lease or invest in and hammering out the best deal by knowing what to ask for and when.
Skills to Look for in a Commercial Broker
Finding a great commercial broker is similar to looking for any other specialized service professional, such as a doctor or lawyer. Skills to look for in a commercial real estate broker include:
Expertise – Particularly, expertise in specific commercial real estate asset classes like office, retail, multifamily, industrial, or special use investments.
Experience – What they’ve done, whether that’s representing tenants looking for space to lease or sublease or working with a landlord to lease or sell commercial property.
Network – Presence in a specific geographic area or submarket signifies the broker has an established network of contacts and understands how deals get done and how tenants and property owners work.
How to Hire a Commercial Real Estate Broker
First, determine what your specific needs are. For example, are you an investor with anchor space in a shopping center that needs to be filled, or do you own a free-standing building and seek a regional or national tenant willing to sign a triple net lease?
Next, look for a broker who only works in commercial real estate. Some agents only “dabble” in commercial estate and sell houses most of the time, which means they won’t bring value to your transaction. In some small markets, it may not be possible to find a specialty broker who only handles leasing or retail property, for example, but always look for an agent who makes their living in commercial real estate.
Third, narrow down your choices by reviewing the professional designations each prospective candidate has to help choose the commercial real estate broker best for your needs. Commercial real estate practitioners with a combination of classroom and real-world experience can help clients reduce risk, enhance credibility, make the right decisions, and negotiate the best deals possible.
It also behooves you to look for brokers that are part of commercial real estate networks and organizations and hold industry certifications. Some top commercial real estate designations include Certified Commercial Investment Member (CCIM), Society of Industrial and Office Realtors (SIOR), and Certified Property Manager (CPM) from the Institute of Real Estate Management (IREM).
6 Important Questions to Ask a Commercial Real Estate Broker
Once you’ve put together your shortlist, make sure to ask these six key questions before hiring a commercial real estate broker:
- When was the agent first licensed, and what type of continuing education is the agent required to take by the state and the employing brokerage firm?
- How many years has the commercial agent been helping clients lease, buy, or sell commercial real estate?
- What geographic locations does the agent specialize in, such as market or submarket, neighborhood, or corridor?
- What type of commercial property does the broker specialize in, such as office or retail, multifamily or mixed-use, or industrial and special-use property?
- What references can the broker provide from similar tenants or businesses to yours that the broker has recently represented?
- For tenant brokers, is leasing or buying a better business decision based on local market trends and the amount of available space for lease?
How to Find a Commercial Broker
The commercial real estate world can be a small, tightly knit community that can be difficult to penetrate, especially for new commercial real estate investors.
One good way to find a commercial real estate broker is to speak with tenants running a successful business in the type of commercial property you’re seeking. The tenant can connect you with their leasing agent or property manager, who can refer you to a commercial broker active in the local market.
In larger commercial real estate markets, the most successful brokers usually focus on specific areas or corridors. Try driving around looking for commercial signs with the same agent name or commercial real estate firm, then contact the broker to learn more about how they work. If you like what you hear, set up a face-to-face meeting in person or with Skype or Zoom.
Remote commercial real estate investors who don’t live in the same market they invest in can use commercial real estate listing sites to find a great commercial broker. Going online to look for a commercial broker is similar to driving and looking for signs, except you can do everything online, saving time and money.
Commercial real estate brokers provide their clients with the competitive edge needed to get deals done in today’s marketplace, no matter their positioning. Tenants looking for space and buyers of commercial property benefit from a broker’s experience and expertise, while the landlord or seller pays the commission fees. Commercial real estate sellers and landlords hire a commercial real estate broker to market and show the property, negotiate the sales transaction, and get vacant space for lease filled fast.