7 Concepts to Master Tenant Representation

Unless you've worked as a commercial real estate broker, it's likely you have only a vague notion of what the job entails. While representing buyers and sellers of commercial properties is a significant part of a broker's role, there is much more to the profession.

Commercial property types such as office, industrial, retail and multifamily are each quite unique, so brokers often choose to focus on just one asset class. Transaction types also vary, and the level of detail and specialized expertise required to execute transactions successsfully leads many commercial real estate brokers to specialize in either selling, leasing or financing commercial properties.

Brokers that elect to focus on leasing tend to either represent landlords or advocate for tenants. Landlord reps, or agency reps as they are often called, work for the building owner, marketing space that is available for lease. Tenant rep brokers work on behalf of tenants, helping them secure space so they can operate their businesses.

As part of a series on commercial real estate careers, LoopNet spoke with David Shirazi, a senior vice president with JLL in Denver. He works as a tenant rep broker focusing on office, and he discussed the tasks carried out by young brokers and the concepts young professionals need to master in order to succeed in the profession. During his conversation with LoopNet, he drew on his experience as a novice junior broker and his current role as a senior broker coaching new hires.

Mastering the Learning Curve

Starting out as broker can be challenging because "you don't step out of college with a skillset to [thoroughly] understand everything that's in a 90-page lease document," nor the "sophisticated concepts we're dealing with throughout the leasing process," Shirazi said.

To succeed, he said you must really want to learn this business "and go out of your way every day to identify the skillsets you don't have and the topics that you," may not necessarily understand. "Then you have to seek out a way to learn those things."

Based on the conversation with Shirazi, LoopNet identified seven foundational concepts that young brokers need to become adept with to flourish in the profession:

• Get to know markets and buildings and develop stacking plans.
• Create prospect lists and build relationships.
• Understand shifts in the market.
• Reach out to listing brokers.
• Conduct tours.
• Learn about leases and negotiation.
• Add value to your team.

Get To Know Markets and Buildings and Develop Stacking Plans

For Shirazi, getting to know buildings and markets is essentially the first task a junior broker should set out to accomplish. By walking around submarkets and inside buildings, brokers become familiar with circulation patterns and amenities in neighborhoods, as well as the condition of buildings and the general satisfaction of tenants in those properties.

Junior brokers are typically assigned certain markets or submarkets to focus on so they can begin cutting their teeth. "In Denver, that might be the Denver Tech Center, downtown Denver, or maybe Boulder," Shirazi said.

Tenant reps are also given the task of "stacking" a building, which requires that they walk each floor to determine where tenants are located and how much space they occupy. "By the time you're done stacking the buildings, you have a really good idea of what, generally, the tenant's size is," Shirazi said, adding that you also learn if their space is lightly occupied or if they are bursting at the seams.

"When you walk past the space, you can look in and say, 'well, they're packed in there, I should call them, because they're probably growing.'" Or maybe the broker sees that the parking lot is full, potentially creating a parking challenge. You might reach out to them to help resolve that issue, Shirazi said.

Create Prospect Lists and Build Relationships

After walking buildings, brokers create prospect lists and begin to find ways to contact decision-makers at target companies. This is where old-fashioned cold calling, or its younger cousin cold emailing, comes into play. However, Shirazi said that in today's world with online platforms like LinkedIn, you should try to find a relevant connection before plowing ahead.

At the larger brokerage shops, "you're probably going to try and utilize the senior people in your office to get a warm introduction into those companies for an initial meeting." The new recruit identifies who the executives are and sees if one of the brokerage firm's senior partners has a relationship with them, because a relationship is 100 times more valuable than a cold call, Shirazi said.

This type of outreach builds both external and internal relationships, enabling a young broker to potentially partner with a more senior peer. Shirazi said, "often, we'll find that a junior person is chasing a company and they will say 'I just saw on LinkedIn that you're connected to their new CFO or head of HR. Can we work together to find a way to get in there?'"

The bottom line is that an office tenant rep needs to focus on securing clients. "Every junior broker should be striving to develop their own book of business, and that's really hard to do. You have to be out at networking events, meeting executives, cold calling … and getting in front of opportunities in any way you can," Shirazi said.

Understand Shifts in the Market

Shirazi said that understanding the current state of the market is as critical as knowing markets, buildings and tenants. "Where are tenants moving, what buildings are popular, and which ones are they moving out of and into?" Shirazi posited. He said that usually in any given market, it's clear where tenants are going. They might be moving to an area because a new transit station just opened or maybe a new building in a submarket is very attractive because of its amenities or features. Understanding the tenant migration patterns of the market is critical.

Apart from ascertaining tenant movement, brokers need to be clear about the industries and employers that dominate their markets, if they are contracting or expanding, and if so, where. Additionally, they need to know all the major roads and/or transit stations and submarket boundaries, as well as the major improvements planned for submarkets like new highway interchanges, new transit stops or major changes like new buildings under construction and significant upcoming vacancies.

Reach Out to Listing Brokers

"In most markets there are really only a handful of listing teams that control the vast majority of the listings," Shirazi said. So, if you're a tenant rep broker, you need to call listing agents and introduce yourself. As a young broker he was told by his supervisors to set meetings with landlord reps over coffee, lunch or drinks to establish a relationship, and learn about the buildings and the owners they represented.

"They've got so much knowledge about the buildings and the landlords, and we think like tenants. We think from the corporate user side," Shirazi said. And, he emphasized that for a younger professional, it can be especially hard to understand the other side's perspective and motivations.

Shirazi recommends reaching out to in-house agency brokers as well, because he views them as valuable resources for a tenant rep broker. "I definitely recommend going out of your way to spend a lot of time with the agency team in your office, because they can provide that type of insight for you and make you so much more well-rounded."

In addition to learning about owners and their motivations, landlord reps are also great sources of information about the history of buildings and submarkets. "A lot of the really senior people, [regardless of which firm they work for], will go out of their way to help a younger person understand the history of the market," Shirazi said.

Conduct Tours

The day-to-day tasks that a senior broker has a younger broker carry out vary greatly by market, organization and individual, Shirazi said. But generally, "most junior people will spend a lot of time out on the road showing buildings to clients."

But before they show space to clients, they need to prepare. For each new client, they typically put together a list of 10 to 20 space options that fit their requirement. "And it's not always as easy as just looking on CoStar (CoStar is the publisher of LoopNet) and saying, 'the rate is $20 per square foot, and that's what I'm going to tell the client,'" Shirazi said. For both junior and established brokers, he added that it's important to call the landlord broker and confirm information; additionally, the call should be a conversation, not just an exchange to confirm data points.

During that call, a broker should inquire about operating expenses, Shirazi said "and find out what else is going on in the building." Concerning the block of space that is of interest, make sure it's still available and it hasn't been leased or is about to be. You don't want to waste your client's time by showing them something that is going to be off the market shortly, he said. "I think that the data gathering component is big for junior brokers."

Learn About Leases and Negotiation

A commercial real estate lease is at the heart of securing space. Shirazi said that these complex legal documents take years to fully understand, but one way that young brokers are introduced to them is through the process of conducting a lease abstract.

A lease abstract is simply the process of reading a lengthy lease, extracting the most critical components and listing them in a table or template. Because every single lease is different, and the order in which information is presented varies greatly, this exercise enables junior brokers to familiarize themselves with the content and zero in on the most important numbers and key elements of the lease in a concise format. This process also saves time for senior brokers by letting them focus on key elements of the lease.

"When you work as part of a bigger team, you're going to have leases that need to be abstracted. And a lot of times that work is going to fall on a more junior person," Shirazi said.

Existing leases are typically dissected by tenant reps when they need to understand the particulars of a tenant's current lease, such as renewal options or holdover penalties.

In terms of learning to negotiate, observing the back-and-forth of lease negotiations between parties - either in writing, over the phone or in person - exposes young brokers to the process as well as to the key priorities for tenants and landlords that must be codified in the lease.

When a junior broker works on their first lease, they are likely collaborating with a senior broker. The new hire will watch their senior peer review the lease and read all changes and comments made by the senior broker, especially the items they have pushed back on. "You really have to learn by osmosis on that," Shirazi said.

Another opportunity to learn about optimizing a lease for a client and negotiating with the other side occurs during calls that include all parties to the lease: landlords and tenants as well as brokers and attorneys for each. "Eventually you get to a point in a lease where you start having calls with all the parties and all their attorneys, going through this 90-page lease document and hashing things out," Shirazi said.

During his college internship at a brokerage firm, Shirazi's supervisor was adamant that he sit in on these calls, saying "this is the most important part of what you're going to learn, sitting in on these phone calls with the attorneys and watching this lease negotiation live and in action."

Add Value to Your Team

New hires rarely work alone and are typically assigned to work under an individual or as part of a team. Team sizes vary tremendously, starting with groups as small as two and going up from there. The team approach is used to ensure clients always have a broker to contact, but mostly so brokers can focus on what they do best.

"Executing a lease transaction can be really demanding, and our clients sometimes need deliverables right away," Shirazi said. So, if you are away from the office, other team members can respond to the client and keep the transaction moving.

He added that the most successful brokers possess both business development and analytical skills, but often those abilities don't reside in the same person. Over the years, many brokers have found that developing partnerships and forming teams with individuals that have complementary skills is efficient and effective.

Succeeding in those first months and years is about getting up and running and finding ways to provide value. Maybe that's covering small showings or going to stack a particular building that your team needs information on, Shirazi said. He added that often it's about running down seemingly obscure information like how many parking spaces there are at a property.

Shirazi reflected that as a junior broker, he had to time the walk between a certain building and a light rail stop, so he walked the distance with a stopwatch. "To this day, I know exactly how long it takes to walk from Platte Street to Union Station."

It doesn't make sense for a 20-year senior partner to go out and do that, Shirazi said. But if a client asks for it, you have to figure it out. If you volunteer for those types of assignments, you're both learning something and making yourself valuable to the senior team.

This article was updated on 12/12/2024