Many companies today use tenant representatives to handle various leasing actions such as leasehold relocations, renewals, expansions, and extensions.
What is Tenant Representation?
Tenant representatives are commercial brokers who typically operate exclusively as tenant advocates while collecting commissions from building owners. This may seem like a conflict of interest, but the industry has self-regulating practices to avoid most abusive behavior. Maintaining a tenant representative relationship builds a degree of trust and efficiency in the leasing process as the tenant rep develops an intimate knowledge of the user client’s culture, policies, and practices.
The Role of Lease Management Software in Tenant Representation
The question arises, in the context of the tenant rep and client relationship, of how the user client can use a lease management system as a collaboration tool. There are a number of specific leasing projects where the tenant rep and client can benefit from a broad use of the lease management system, such as Visual Lease:
1. Critical lease dates
By having the tenant rep have access to the leasing system, the tenant rep can monitorcritical dates well in advance of taking action, and advise the user client of strategic options: whether to renew, expand, or relocate. Having these extra set of eyes on critical action dates, supplements the activities of lease administrators and leasing specialists.
2. Market rates
The tenant rep can supplement leasing information of user leases with current market rates; providing insight to lease renewals at favorable rates, or whether it’s advantageous to relocate at new but lower rates.
3. Market Conditions
The tenant rep can supplement user lease data with market data such as absorption, supply and demand, competitive offerings, and changes in local tax or other market factors.
4. Communication Medium
Tenant reps can use the leasing system to update the user client on project status, such as renewals, or new leases. The system becomes an efficient medium for collaboration and communication, easily accessible remotely from the field, or in the office. Updates are real time, keeping both the user client and tenant rep current on leasing activity, project status, and rent payment status.
5. Flagging Problems
One area where the tenant rep can add significant value is spotting and reporting irregularities in escalation charges. By monitoring escalation payments, the tenant rep is able to flag errors or overages in certain CAM charges. It is here where the user client can benefit from the experience and knowledge of the tenant rep who typically has broad and deep experience with landlord practices.
6. Strategic Planning
The user client will benefit from involving the tenant rep in the strategic planning of the leasing portfolio, particularly in the context of facility consolidations, or strategic relocations. The leasing system becomes an essential tool in the planning process, by aligning actions with critical lease dates or options. Another important area for strategic planning is the question of lease versus buy, particularly in light of the pending FASB rule change on operating leases. It is usually advisable to gain the input from the tenant rep on lease/ buy questions, and to use the leasing system to flag these questions.
The Evolution of Tenant Representation
The tenant representation industry has matured considerably over the last ten years. It’s now a common practice for user organizations to enter into one or more exclusive partnerships with commercial realty firms, to execute leasing actions as well as to serve as strategic advisors to the corporate real estate organization. It’s both practical and advantageous to include the tenant rep advisor in the lease management system for the reasons cited above. By doing so the user client leverages the knowledge and experience of the tenant rep, as well as leverage the value of the leasing system itself.
Tenant Representation FAQ’s
What are the main responsibilities of a tenant representative?
A tenant representative’s responsibilities include negotiating lease terms, handling lease renewals, relocations, expansions, and extensions, and providing strategic advice to optimize the client’s leasing portfolio.
How do tenant representatives differ from traditional real estate brokers?
Unlike traditional real estate brokers who may represent both tenants and landlords, tenant representatives exclusively advocate for tenants, ensuring their interests are prioritized in lease negotiations and other leasing activities.
What features should a lease management system have to support tenant representatives?
Lease management system should include features such as critical date tracking, market rate analysis, real-time communication tools, document management, and reporting capabilities to support tenant representatives effectively.
How does lease management software improve transparency in the tenant rep-client relationship?
The software provides a centralized platform where both tenant reps and clients can access and update lease information, ensuring transparency and reducing the risk of miscommunication.
