This presentation does not recommend foregoing professional real estate agency partners Comment when I submitted this presentation for consideration – “A very interesting topic that'll have RE brokers picketing at the back of the room.” The key is: Every organization needs to have an internal focus on managing their real estate portfolio Just Kidding!!
Mark Ellis, CFM Director, Global Facilities & Real Estate - Tekelec As manager of 26 leased office locations around the world, Mark Ellis has encountered numerous triumphs and tribulations in managing his company’s portfolio. Having been involved in negotiating over 75 lease contracts worldwide, he has had an opportunity to work under exclusive, preferred, and unaffiliated agreements with minor and major players in the Real Estate Agency world. His experience and knowledge of these relationships and their effectiveness in helping to reduce lease costs over 30% worldwide for his portfolio make him an ideal individual to learn from. Meet Our Presenter
Learning Objectives Understand that the tools and benefits of the real estate partnership go both ways Understanding the type of partnership you should have with a real estate agency partner given your portfolio Choosing the right local agent or agency for your transaction Ensuring that your agent is motivated to get YOU the best deal and giving you THE critical post-transaction deliverable Cultivating the partnership – it’s a two-way street Look for “The Bottom Line”
Tools and Benefits of an Effective Partnership Regular communication with a dedicated account team Lease management tool and initial abstracts where needed Proactive market monitoring in existing locations Access to market reports Access to white papers on important real estate topics Initial assistance with real estate “side projects” Annual-threshold commission sharing proposition Benefits both sides of the partnership
Exclusive vs. Preferred Exclusive Partnership Agreement where you are required to use the agents of the partner for all transactions Too often this leads to a hands-off approach from the client, no real leverage for creative commission agreements, and are locked in to the local agent regardless of performance Preferred Partnership Requires partner to earn business with each transaction Can and should receive same tools and benefits of an exclusive partnership, albeit subject to reasonable activity levels Commission-sharing proposition is more prevalent in this relationship to incent client to utilize agency Remember – It’s all about the individual agent
Preferred Partnership – The Good Story Regular communication with a dedicated account team - quarterly Lease management tool and initial abstracts where needed – free and remained so Proactive market monitoring in existing locations – several agency-initiated transactions Access to market reports – full access to library Access to white papers on important real estate topics – full access to library Initial assistance with real estate “side projects” Annual-threshold commission sharing proposition Significant rebate on HQ extension Got the best dots!
Exclusive Partnership – The Bad Story Regular communication with a dedicated account team – when they felt like it Lease management tool and initial abstracts where needed – For $90,000 annual Proactive market monitoring in existing locations – Had to ask for specific location Access to market reports – upon request only Access to white papers on important real estate topics – upon request only Initial assistance with real estate “side projects” Annual-threshold commission sharing proposition – not a chance Became a dot-referral service
The Serviced Office Blind Spot Serviced office (like Regus) portfolios suffer in most exclusive partnerships Most large agencies do not put the proper attention and focus on these transactions – there are alternatives….unless you are exclusive, of course There’s more than just Regus out there! Should get same property search and comparison as traditional Can easily get locked into top-tier pricing and/or autopilot Need an agent that understands the differences in negotiable terms as compared to traditional Setup fees, exit fees, service fees, operational flexibility, parking, internet connection, phones, furniture fees, and sometimes various “hidden fees” Manage these transactions – do not allow local resource “sweet deal” Need same focus on these transactions too!
Choosing The Right Local Agent Start with the preferred-partner recommended agent Be a good partner, stay true to preferred status Explain the objective: business strategy, use, desired submarket, building- type, critical amenities, budget, and operational flexibility targets for the transaction Examine the initial property search report critically Did they listen to you? If there are mismatches, did they explain why they still meet objectives? Can they give examples of recent transactions they completed and what they were able to achieve through negotiations from starting positions? If you are satisfied, move to commission negotiation If not, explain to your account management team why you will be looking at other agents The right agent will be a great listener
Negotiating Commission Agreements For international transactions, often the client pays some or all of the commission fee Understand the commission norms for the market Do not be afraid to construct a creative commission agreement Try to base on exceeding objectives (higher percentage), percentage of negotiated savings from beginning position, min/max structure, lease abstract deliverable, and/or other creative ideas to incent the best deal If can’t agree, utilize your account team to resolve - but in the end, be satisfied with your agreement or end the engagement and start again elsewhere This is NOT about hammering the commission down to an unreasonable level If you do not achieve an agreement on commission structure, stop here Be fair – do not go beyond an initial search unless you engage The right agent is creative with commissions
The Domestic Transaction Conundrum For domestic transactions, the landlord pays the fee Sounds great, but you can bet you pay for it in the deal So, how do you ensure that you are getting the best deal if your agent is paid more when the landlord makes more? You need to focus on comps, evidence of the agent to negotiate strongly from initial starting position, and press for what you need to get the deal done Ensure at least three properties are FULLY negotiated so you can maximize leverage in final negotiations with your preferred choice Landlords are competing against each other for your business – leverage it! Remember, your agent doesn’t get paid unless they make a deal, so stick to your guns! The right agent will be creative and meet objectives…. …..but be reasonable and understand the limits Full negotiation of several properties a must
Cultivating The Partnership Take an active role in managing your portfolio Help your agency help you Passive management leads to missed opportunities Meet your account team regularly to discuss market condition at current locations and your current business strategic plans Review upcoming critical dates and develop a plan to meet location objectives Provide honest and critical assessments of local agent performance in recent transactions Indicate where service or information could be improved Help your partner improve their performance
Learning Objectives – Mission Accomplished! Understand the tools and benefits Dedicated account team, lease management tool, initial market and side-project reports/advice, proactive research for your market opportunities Understanding the type of partnership you should have with a real estate agency partner given your portfolio A Preferred Partnership is likely your best bet Choosing the right local agent or agency for your transaction It’s all about the individual agent, don’t be afraid to shop, but be fair Ensuring that your agent is motivated to get YOU the best deal and giving you THE critical post-transaction deliverable The right agent will be flexible to be tenant-motivated and get your LEASE ABSTRACT Cultivating the partnership – it’s a two-way street Providing constructive feedback to make your brokerage a better partner
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