#0066 - Should You Work With a Boutique Tenant Rep Agency or One of the Giants?

Confessions of a Recovering Landlord

No one ever got fired for buying IBM. That was the saying to justify buying PCs from IBM in the late 1980s. What does this have to do with negotiating office and warehouse leases? People that work for large corporations who make decisions about what consultant to hire or product to buy for sure thinks about the perceived risk of hiring or buying the wrong one. If it goes bad for some reason, can they be criticized for using the wrong one? What's the safe decision?

And, we definitely see this play out in commercial real estate. All the big shops have excellent CRE professionals and we do business with a lot of them. But there are a few reasons why I think a boutique firm is a better way to go.

1. Boutiques aren't full service. Lots of people talk about how they are full service, as if that's a good thing. But it's not-why? Mainly because of conflicts of interest. When I was an asset manager and we listed a building for sale, the details of our leases (we called it the rent roll) mysteriously ended up in the hands of the tenant rep group of the listing company. And when I was outsourcing our leasing to the asset services divisions, I was told that they would put a tenant rep on my account because they know deals coming down the pike before anyone else and I'd get a crack at them before other landlords.
2. The experience of the person actually handling the assignments. Let's say a company with 25 locations in the US hired one of the biggies. They will be assigned an account manager to be their primary contact. That person works with all the agents in the various cities to get the deal done. But the individuals in each of those cities are often junior agents who aren't that experienced. In a boutique shop, all the work will be handled by a highly experienced agent. If it's in the client's best interest, they will partner with the best person in the local market to help with the transaction - they aren't required to use someone in the same company.
3. Building relationships is critical and that's often hard in a big shop.

Most of the independent brokers I know once worked for one of the biggies. I often ask them if they miss it. The answers is always no. I also ask if there is anything that the big companies did for their clients that an independent can't do. Every one has said no. I've mentioned before on this podcast that after 9 years on my own as a corporate real estate advisor I joined a regional firm because I had always wondered about that question - what are they doing for their clients that I'm not doing. I quickly learned the answer was nothing.

So, if you want to know your agent has no conflicts of interest and is highly experienced use an independent brokerage company.