Five Commercial Real Estate Myths That Tenants Still Believe
Although the commercial real estate industry has been around for at least 230 years, myths about the industry and what brokers do still abound. Here are five of the most common ones among tenants today, and why they're wrong.
Furthermore, there are multiple components to the rent. A $60 per foot space might be less expensive than a $58 dollar one, if the more expensive building has $3 less in expense pass throughs. You might also do better to pay a little bit more rent up front if you can get lower rent escalations, as well. Finally, landlord concessions -- which are common in commercial real estate -- come into play. Six months of free rent can frequently make up for a higher base rent, after all.
Myth: I can find my own space on the Internet.
Many spaces are posted on listing sites like LoopNet or on the websites of listing advisors, but those tools are far from being comprehensive solutions. First, do you have time to search every site every day to find new listings? Second, many of the best spaces get shown and leased long before they ever make it on the commercial real estate web. If you're looking on the Internet, you're missing great options.
Myth: Brokers are expensive.
No matter what happens, you indirectly pay for the commercial real estate broker's commission. While the landlord is the one physically signing the check, he or she is paying that fee with your rent money. This means that you have a choice. You can pay for your landlord's broker to negotiate against you, or you can pay the same amount of money, cover the landlord's broker and cover the cost of your own tenant representative who will zealously represent your interests. Having a tenant rep isn't expensive -- it's going without one that will cost you real money.
Myth: Brokers don't care about my company's needs.
Commercial real estate brokers only get compensated when a transaction gets consummated. While this might seem like a reason to motivate them to push you into a transaction that is not in your interest, the opposite is true. Think about it for a second. A waiter or waitress at a restaurant might be able to talk you into an extra appetizer or a more expensive bottle of wine, but is someone really going to make you (and your attorney and your CFO) spend months negotiating and signing a multi-year contract that could cost millions of dollars? Of course not. Brokers know this and will usually identify if you have a need up front so that they don't waste your -- and their -- time.
Myth: I don't need an office anymore.
You might not need an office anymore. If you're a one or two person company, co-working spaces and the like can be good options. However, traditional leased office space still makes sense for most users. At scale, it is less expensive. It also allows you to control your space, use it to build and reflect your culture and brand, and lets you customize how you use it. If you aren't sure, talk to a commercial real estate broker. He or she will help you analyze your options and to make a good choice for your business.
Pacific Coast Commercial
619 469 3600
www.PacificCoastCommercial.com
Lic. 01209930
Article by: REoptimizer
DISCLAIMER: This blog/article has been curated from an alternate source and is designed for informational purposes to highlight the commercial real estate market. It solely represents the opinion of the specific blogger/author and does not necessarily represent the opinion of Pacific Coast Commercial.
All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner of will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.
Myth: It's all about getting the lowest rent.
This myth is almost true. The actual rent isn't what matters -- it's the total occupancy cost over the life of the lease, relative to the economic benefit that you receive. Would you rather lease a lousy space at $40 a foot or a great space at $42 a foot?
Furthermore, there are multiple components to the rent. A $60 per foot space might be less expensive than a $58 dollar one, if the more expensive building has $3 less in expense pass throughs. You might also do better to pay a little bit more rent up front if you can get lower rent escalations, as well. Finally, landlord concessions -- which are common in commercial real estate -- come into play. Six months of free rent can frequently make up for a higher base rent, after all.
Myth: I can find my own space on the Internet.
Myth: Brokers are expensive.
No matter what happens, you indirectly pay for the commercial real estate broker's commission. While the landlord is the one physically signing the check, he or she is paying that fee with your rent money. This means that you have a choice. You can pay for your landlord's broker to negotiate against you, or you can pay the same amount of money, cover the landlord's broker and cover the cost of your own tenant representative who will zealously represent your interests. Having a tenant rep isn't expensive -- it's going without one that will cost you real money.
Myth: Brokers don't care about my company's needs.
Commercial real estate brokers only get compensated when a transaction gets consummated. While this might seem like a reason to motivate them to push you into a transaction that is not in your interest, the opposite is true. Think about it for a second. A waiter or waitress at a restaurant might be able to talk you into an extra appetizer or a more expensive bottle of wine, but is someone really going to make you (and your attorney and your CFO) spend months negotiating and signing a multi-year contract that could cost millions of dollars? Of course not. Brokers know this and will usually identify if you have a need up front so that they don't waste your -- and their -- time.
Myth: I don't need an office anymore.
You might not need an office anymore. If you're a one or two person company, co-working spaces and the like can be good options. However, traditional leased office space still makes sense for most users. At scale, it is less expensive. It also allows you to control your space, use it to build and reflect your culture and brand, and lets you customize how you use it. If you aren't sure, talk to a commercial real estate broker. He or she will help you analyze your options and to make a good choice for your business.
Pacific Coast Commercial
619 469 3600
www.PacificCoastCommercial.com
Lic. 01209930
Article by: REoptimizer
DISCLAIMER: This blog/article has been curated from an alternate source and is designed for informational purposes to highlight the commercial real estate market. It solely represents the opinion of the specific blogger/author and does not necessarily represent the opinion of Pacific Coast Commercial.
All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner of will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.
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