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When leasing out space, how useful is a commercial property agent?
I own a couple of buildings and have decided to lease one out as office space. When finding a tenant is it easiest to use a commercial property agent, or can I handle the process myself? Does a commercial property agent take care of filing all of the paperwork once the lease is signed? Why would I enlist the help of a commercial property agent to rent out my building?
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2 Answers
An interesting item to consider is the agents comission, typically 3-5%. If you choose to list with an agent, I'd suggest negotiating this item as well as the payment terms upfront. Historically most agents receive X% of the Total Lease Consideration (TLC - projected rent collected for the full term) upon execution of the lease. The catch here is if the tenant defaults or cancels the lease at some point during their tenancy you are still out the full comission. Agents seem to be more willing, especially in this commercial climate, to accept progressive payments.
In a period when there is excess commercial space in many parts of the country, space may be hard to rent if it is not listed by a commercial realtor. The realtor can also help you with setting rents on the property and advice on how long to allow a tenant to have a lease on any individual space withing your property. It is hard to get this information on your own.
The realtor will expect a portion of the rent as payment. Be careful when signing a listing agreement that you figure out how much it will cost you and are willing to pay it. Also decide how long you want to have the same realtor list your property. In the event there are no results, you want to be able to switch realtors after a reasonable time, such as three to six months. Avoid long term listing agreements.
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