Choosing a commercial real estate broker can be a daunting task, particularly for those unfamiliar with the process or for companies entering a new market. Real estate costs typically make up 20-25 percent of the operating expenses for any business, so making informed real estate choices is crucial to the profitability of your company. Finding a broker with a deep knowledge of the market is invaluable, not only for finding a prime location at a reasonable price point, but also in helping to create a workplace that allows your firm to attract and retain your most valuable asset in today’s market – talent.
So what are the qualities that separate a great broker from a good one?
“The main two ingredients that should be looked at when selecting a broker are experience and integrity,” says 30-plus year veteran Gary Holmes, SIOR, President of R.W. Holmes Realty, an independent brokerage firm based in Greater Boston. “But what I think really differentiates the top brokers now is the ability to not just talk the economics, but to help clients establish an optimal work environment.”
Choosing a broker with extensive experience within the industry and who specializes in your property type (office, industrial, lab or retail space) in that market is essential. When interviewing brokers, always request a list of the major deals they have transacted, as well as references from their clients. It is also a wise practice to consider hiring brokers who have earned professional designations such as SIOR (Society of Industrial and Office Realtors), because in addition to significant experience in commercial real estate, they have demonstrated an ongoing commitment to keeping up with industry trends.
Holmes says that top brokers routinely go above and beyond the standard job description. “What you’re looking for in a broker is not just someone who is going to get you the best price, but one who serves as an advisor, and looks at the larger real estate picture,” he says. “Saving a few bucks on your bottom line is a drop in the bucket compared to what labor costs are and what you’re trying to achieve in terms of the profitability of the company.”
Holmes adds that in addition to negotiating favorable terms for a tenant, a skilled broker will consider a number of other factors, such as the reputation of the ownership (how well they take care of their tenants) and the performance of the building systems (HVAC, power, connectivity). As a real estate advisor, brokers should also be able to help clients maximize their tenant improvement allowance by recommending trusted architects, contractors, and other professionals in the market.
While experience is a key determinant in selecting a broker, it should be noted that not all brokers with years in the industry have made a commitment to keeping up with industry trends. Technological advances in data-gathering in recent years has provided a wealth of market information, and the best brokers have learned how to access and leverage that information to make better decisions for their clients.
“A broker with experience and market knowledge knows how to take that data and translate it, because there are many underlying market points of consideration to take into account that just aren’t reflected in reports,” says Chris Falk, SIOR, Principal with Newmark Grubb ACRES in Salt Lake City. “You have to understand the market, and only the people that are on the street can provide that information to give clients real-time data and intel.”
Both Falk and Holmes have credited their ability to remain current with industry trends and technology to their associations with professional organizations.
“The biggest advantage of belonging to commercial real estate associations such as SIOR is that you can have all of the experience in the world and you can have great integrity, but so many people become complacent after being in the business for a while and miss out on what is new,” says Holmes. “The training, the courses, and the conventions (held biannually) keep the brokers informed of new developments and technologies that allow them to make better decisions.”