Tenant Rep Only versus Full Service Firms
One of the talking points that tenant representation only firms like to stress is the fact that they only represent corporate occupiers and that eliminates any conflict of interest that could exist at firms who represent both Landlords and Tenants. While you can’t argue against the premise, as it does eliminate the possibility, is this fact in reality a key benefit or good marketing?
Integrity is Critical
Specialization is a huge benefit, but tenant representation professionals at full service firms offer the same benefit. A common quality among highly successful real estate service professionals is integrity, and you either have a high level of it or you don’t. In my experience, corporate office tenants select tenant rep brokers based on trust, knowledge and relevant experience, and if the executive responsible for selecting a service provider has questions about the integrity of the individuals they would work with, they won’t hire them no matter what type of firm they work for.
I am not naïve enough to think that a tenant rep broker has never crossed the line and for whatever reason(s) had the motivation to encourage the selection of a building that was better for his self interest than his clients. However, in this time when transparency is not only expected but required, any real estate professional who makes these types of decisions is destined for failure. Having a high level of integrity is a choice, but not optional if you want to survive long-term.
While I doubt many think of it in this light. Isn’t it kind of insulting to suggest a corporate real estate executive, CFO or CEO is not savvy enough to recognize when a tenant broker is steering them towards a building their firm has the leasing agency? I would consider that a huge risk to take. Should I have a client interested in a property in which my firm has the leasing agency, the fact that the agent I might be negotiating with his 6 offices down the hall will not impact how I represent my client.
Furthermore, tenants make real estate decisions, the tenant rep doesn’t. I always chuckle when I hear a broker say, “I put XYZ Company in that building”. No broker has ever put any company in a particular location. I am not familiar with any brokers that possess that kind of influence, but I would love to be that guy. Tenant brokers provide key information, and counsel to help their clients hopefully make a wise real estate decision and then manage the transaction or execution of that decision. They are in many cases trusted to influence the decision, but they don’t make it.
Sales Stars and Executers
In the tenant representation game and brokerage services in general sometimes the very best technicians and executers are not always the individuals with the biggest incomes. Most commercial real estate brokers have the dual responsibility to both develop new business and deliver services to their clients. You have to generate new clients in order to survive and deliver high quality service to keep them. I believe that is why you see the trend of increasingly more team formats that combines the strengths of rainmakers and executers versus an individual approach. There certainly are other benefits to a team approach, but that is the subject of another blog post.
Big Firms vs. Boutique
High quality brokers reside at full service and tenant rep only firms, as well as national and local boutique firms. The premise that a boutique firm automatically provides a higher level of customer service than the big national firm whose name might start with the letter “C” (pick one), is just plain hogwash. You can take the most successful brokers from full-service national firms and boutique firms, swap flags and they will continue to provide a high-level of service.
I should note that I have spent roughly half of my 22 year career at a boutique firm and the remainder with a big national firm, so I have sold from both positions. Everyone has their unique positioning statement and I suspect if I were associated with a tenant rep only firm, I would stress we only represent users as well.
Branding is important, but being trustworthy, the ability to provide high-level expertise within your niche and consistently delivering services that exceed your client’s expectations are the key ingredients for success in the long-term. You have to continually improve the perception of your package in order to remain competitive and create new opportunities. I know I am striving for this as well. We all desire more high-quality clients, but if you only have a pretty package and the product isn’t good, ultimately you won’t survive.