5 Tenant Representation Myths

As an occupier, if you have never experienced a real estate transaction it is easy to assume using tenant representation will cost you. In reality, that could not be further from the truth. 

Commercial real estate is inherently stacked against the tenant. If you are not being represented, there is a good chance you are leaving money on the table. 

Here are the 5 most common myths that occupiers are made to believe.  

Myth 1

Engaging Cresa for a lease renewal will cost your company by diminishing real estate savings. 

 
The Truth

Brokerage fees are not additive to your real estate expense. They are already embedded and don’t disappear or reduce absent the engagement of Cresa. 

The landlord’s advisor receives a larger fee should the client not engage Cresa. They are incentivized to discourage the use of tenant representation resulting in a landlord-favored deal and high fees. 

Myth 2

Our company has no interest in relocation. We plan on renewing and do not need tenant representation. 

 
The Truth

Our role is not to find space. Rather our sole objective is to drive the most aggressive economic and non-economic leasehold regardless of renewal or relocation. 

The moment a tenant requests a proposal to renew without an advisor the landlord achieves the upper hand in the negotiations. 

 
Myth 3

We are getting a good deal. The landlord reduced our rent, so we are saving money. 

 
The Truth

A “good deal” can only be benchmarked against relocation alternatives that have been brought to full economic and non-economic maturity pursuant to a methodical process of orchestrating competition for a client’s tenancy. 

Landlords do not give their best deals. Strategy and leverage define market reality. 

Take what we like to call the market-maker, not the market-taker approach. 

Myth 4

We already have a lease in place. 

 
The Truth

By placing landlords in a leveraged position, a client can strengthen its leasehold covenants to secure greater flexibility costs containment and expense mitigation. 

The existence of credible leverage delivers the opportunity to improve one’s leasehold position. 

Don’t miss the opportunity to achieve unobvious savings and enhanced risk mitigation. 

Myth 5

We have a relationship with the landlord and/or landlord broker.

 
The Truth

The landlord’s objective is to maximize profits and shift economic and non-economic risks to the client. The landlord’s advisor has a fiduciary obligation to achieve the best deal for the landlord and does not represent the best interest of the occupier. 

The landlord is in the business and yet, they still rely on professional representation. 

The financial implications of a leasehold are significant and a similar strategy of professional representation should be employed by the tenant. 

 
Blog
January 24, 2023

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