JR’s take on the History of Tenant Representation

About twenty years ago, the only place that you would have seen Tenant Representation Brokers would have been New York, Chicago, and a handful of other cities around the country.  Tenant Rep started during a time period where office building supply was quickly overwhelming the demand due to economic changes, construction outpacing demand, ect.  When the vacancy dropped, banks started to get nervous and develop a more “hands on” approach with building owners sitting on loans.  (Sound familiar!)

It was apparent in the 70′s just as today that the tenant was in a stronger negotiating position.  One major problem however is that they did not have the expertise to take full advantage of the opportunities being presented.  Landlords understood how to track lease rates, vacancies, positive (or negative) absorption, but most tenants did not have access or experience with the variables that control a typical lease deal.

It was primarily out of this need that Tenant Representation was created.  One of the reasons that have such a passion for my job is that we are defenders by nature.  We do not “defend tenants against the evil landlord”… instead we defend the tenant against ignorance (lack of market knowledge).  Now there will always be the “do-it-yourselfers” out there that believe that their negotiating skills are just so awesome that they can tackle a deal without understanding their market.  I would relate this to going to a big car dealership on the freeway and buying the newest BMW without knowing the fair market value.  (Car Salesman just got a new best friend!)  This is fairly common with smaller deals, but I would not recommend it unless that tenant has access to the experience, market knowledge, relationships, and leverage that most of the professionals in our industry enjoy!  We have some great professionals on the Landlord side of the business and they will make you feel absolutely wonderful signing a lease that is totally pro-landlord.

In Houston, there are just a few hundred commercial real estate professionals in the office industry.  Most of us veterans know each other and those relationships provide  better access in tight markets.  When things slow down, our industry knowledge can pinpoint quickly the highest and best use for our clients.  While many of my clients are concerned about rental rates, culture, safety, parking, amenities, even LEED certification. (Green buildings) If you are reading this as Tenant Rep broker, you know all of this already.  If you are reading this as a Tenant, let me assure you that there are more reasons to use experienced help than not!  If you ever want to talk shop about the market, just give me a call and I will be glad to help!