Do I Need A Tenant Rep Real Estate Broker in NYC?
I'm an NYC tenant, do I need a tenant rep broker? Who pays the broker? Why does hiring a broker who only represents tenants matter? Can I just represent myself? We answer your questions.
Who Pays Tenant Rep Brokers in NYC? The Landlord.
Tenant rep real estate brokers are always paid by the landlord in NYC (and in the US). People tend to assume that because of this, the landlord simply bakes our commission into the rent or other lease terms so in the end it is effectively paid by the tenant. This is not the case.
In any deal, whether it’s a new lease or a renewal, there is a commission on the table whether or not you as a tenant engage a broker to represent you. If you choose not to engage representation, the entire commission goes to the landlord’s agent, who is hired by the landlord and incentivized to lease the space at the best possible financial terms for the landlord. If you do engage a tenant rep, the commission is split between the landlord’s agent and your tenant rep broker, whose sole mission it is to represent you and negotiate the best terms for you as a tenant, not the landlord.
The bottom line: the commission does not change when you hire representation; the only question is whether it goes entirely to the landlord’s representation or is split between them and your NYC tenant rep broker. What does change is your deal economics: a good tenant rep broker will always use non-public information available to them to improve your deal economics and save you money.
So, Why Does Hiring A Broker Who Represents Tenants Only (and Never Landlords) Matter?
Your tenant rep broker’s job is similar to that of a lawyer – to represent your interests only and negotiate the best possible outcome for you, using knowledge of any and all information that can be used to do both of those things. Instead of a court room, we operate in the real estate market.
Now imagine having a lawyer that represents you….but also your opposing side. And then imagine your opposing side is a well-known landlord with a large portfolio who contributes more revenue to your lawyer or their firm than you possibly can as a small or medium size tenant. Now you have a courtroom David vs. Goliath with a twist: the same person, team, or company represents both sides. Hint: David doesn’t win in the real estate version of this fairy tale.
Would you want that? We wouldn’t either. That’s why we started Vicus Partners, and its why we continue to exclusively represent tenants and never landlords. It’s our job to represent you and your best interests only, from finding you the best possible space in the market to using relevant information to negotiate the best possible financial terms for you once you do. Because we never represent landlords, we are free from the standard conflict of interest faced by other firms and can act accordingly every step of the way. We’ll give you an objective and informative overview of the market and available spaces, not just the spaces available in our portfolio landlords’ buildings. We’ll negotiate terms that optimize your bottom line and save you money, without trying to find the balance of numbers that also work for our firm’s landlord clients. We know and have excellent relationships with almost every New York City landlord from 25 years of experience, without worrying about also representing their interests.
Hiring a NYC tenant rep broker who only does tenant rep and never landlord rep matters, because it’s the only way to get a result that represents your best possible interests only. Period.
Can’t I Represent Myself? I’m Smart and I Know My Own Business
Leasing office space is much like everything else in life – it helps to have a professional/river guide on your side who’s full time job it is to know their industry, and how to use that knowledge to help you. You know your business and how to make the right decisions for it better than anyone – so if it was as simple as finding a pretty office that fits your people and looks move-in ready, our industry wouldn’t exist. Let us tell you why we do:
1. A tenant rep broker has non-public information that will save you money.
As any negotiation MasterClass will tell you, negotiating is an art, not a science. But in most cases—this one included—you can’t negotiate effectively without the right information. A good tenant rep broker has the right information and knows how to use it to your benefit. For example, let’s say you speak directly to your Landlord about renewing your lease and they offer you a base rent of $x, x months of free rent, a tenant improvement allowance of $x, x months of security deposit and a real estate tax year of x.
You can go back with lower numbers, and maybe you end up somewhere in the middle. But here’s where having the right information comes in: how do you know that’s the right rent number, the right months of free rent, the right tenant improvement allowance, the right amount of security and the right real estate tax year relative to recent comps in your building, market conditions, and what other landlords in other buildings are doing? How do you know if this deal is a good deal for you and your bottom line compared to similar spaces in other buildings? How do you know that your rights are protected in non-quantitative arenas like the good guy guarantee, your out clauses and rights of first refusal, and especially important now, your business interruption clauses?
The answer is simple: it’s our job to know all of the above, and more. It’s our job to use that information to help you get the right space, at the right price and economic terms, and the right rights (no pun intended) to make sure you can do what you do best – optimize your business. The best part? It’s a job you don’t pay us for, and that will save you significant money.
2. A tenant rep broker is your one trusted point of contact throughout the process, from space search to negotiations.
Whether you’re renewing a lease, or moving to a new space, a good broker will show you multiple spaces on the market along with recent comps in your building, similar buildings that fit your desired parameters, and your neighborhood. From those options, you’ll pick a few (we recommend 3) semi-finalists, submit non-binding offers with economic terms aimed to land you at the right terms for you, and negotiate those against one another to get the best deal.
Doing this without a broker is similar to residential real estate, but without a multiple listing service that aggregates all your options – you can find spaces in different buildings by going to the building’s website, and contact the building’s leasing office or the broker listed for the building. The issue is that while that broker or leasing office will work with you, they’re not working for you. They’re working for the landlord of the building. A tenant representative broker, on the other hand, works both with you and for you, from sourcing the spaces in any and all buildings that fit your desired parameters, to negotiating economic terms on semi-finalist and then finalist spaces, to moving into your new home and any of the processes that come during or after the move-in.
3. A tenant rep broker understands both the market and its players, without conflict of interest from representing both sides.
Anyone can type a few words into Google and find what appears to be a great office space or ask their network for a general sense of the real estate market. After all, real estate is a spectator sport – and everyone has an opinion.
Your tenant rep broker, however, has facts. We know the market from both participating in and seeing comps for recent deals – in your neighborhood, in the buildings next door, and even in your building. We also know what only inside professionals can tell you: if the economic terms you’re offered make sense relative to recent comps, the market, and what other landlords in other building are doing; if the escalation clause is fair; if you’re being nickel and dimed on how electric is billed, how over-time air conditioning is handled or how you’re charged for freight elevator use during move in or construction (this can sneak up on you in a lease, and really adds up) – the list goes on and on.
As tenant reps, our job is to understand, dissect, and communicate the whole picture so you end up with the best possible space, at the best possible price; that means understanding everything from how to deliver the best lease terms (not just the ones on page 1 of a 50+ page lease) to the knowing which landlord you’re marrying for the next 3 – 15 years and how to use that knowledge to get you the best possible deal. We have the relationships with most New York City landlords and the experience to navigate your lease, without the conflict of interest that clouds our ability to represent you only.
4. A tenant rep broker stays your unwavering advocate and partner in long term success beyond the transaction.
If we’ve done our job successfully, we’ve developed a relationship with you as our client that goes beyond the transaction level. We’re not saying we’re showing up to family barbeques but…we’re not not saying that. Your space is just one part of your business’ story, and possibly one of many spaces you’ll have as the story continues. We want to be there for all of it, as your unwavering advocate and a partner in your long-term success. That means exceeding expectations when we represent you transactionally, and continuing to represent you once the lease is signed whether it’s reminding you of important upcoming trigger dates in your lease, connecting you to trusted partners throughout the life of your lease, helping you communicate with your landlord on any issues you experience during the lease, keeping you updated on the market as it relates to you and remaining ready to help you expand, move, or negotiate a renewal, and anything else.
In the end, like anything else, it all comes down to trust. When it comes to your business, you want to work with someone who you trust to represent your best interests only, who can give you the right information and guidance you need to make important business decisions. That’s where we come in.