In a society that values independence and time efficiency, business owners looking for commercial real estate are often tempted to tour and sign leases on available spaces without the help of tenant representatives. Occasionally, this method works out and tenants find a space that they are happy with, but these tenants can run into obstacles later down the road, if not immediately. We sat down with Bre Brown, Vice President at one of the country’s top brokerage firms, Jones Lang LaSalle (JLL), to discuss what business owners need to know about relocating within or to Austin, and the reality of why tenant representatives are so important when looking for new property.
Our first question was for business owners seeking to relocate, and specifically, how they should begin preparing their relocation to Austin. Because Austin is such a great place to live and is continuing to grow incredibly fast, it’s not surprising that businesses often get their start here with a location within the city. However, the process of opening in Austin is easy, which is why when looking to relocate to Austin or open for the first time, Brown advises giving yourself at least six to nine months. While this may seem like an excessive amount of time to wait for those that are eager to get started, this time period is crucial because it accounts for construction, which is a feature that some people forget to factor in. Business owners should also be patient when it comes to looking for a good space but be ready to move fast when a favorable opportunity opens up.
Now let’s say you (a prospective tenant), have hypothetically found the perfect space. You have toured the property, its location is promising, and you are ready to sign on a lease. The problem is that landlords of perfect properties like this one receive more than just your offer and so the complication is: how are you going to win over the landlord? Brown says in instances where financials and sizes are comparable, that often it comes down to brokerage relationships.
“I think people fail to realize how important that is, even in our market, things are moving quickly, and sometimes the landlord might have the pick of the litter; they might have four people working on one space and they all are dying for this one space… If all financials are comparable… and terms are more or less the same, it’s going to come down to whichever broker has the better relationship.” -Brown.
Brown continues by sharing how JLL has won deals on spaces because of their stronger relationships, where leasing agents have fought on their behalf for leases. For businesses that have potential spaces in mind but currently lack a tenant representative, Brown suggests calling the leasing agents for those spaces and asking who they have worked with successfully in the past as a way of getting into contact with tenant representatives that have strong relationships with others in the business.
Another tip from Brown on winning over leasing agents is having and showing financial savviness, especially for younger tech companies. Is your financial work organized and clean? Or are there notes scribbled here and there with sticky notes falling out? Brown advises tenants to think of this as you would an interview saying, “you wouldn’t go into an interview with ten sheets of paper that have written notes all over and say ‘here!’” She also recommends having a typed and updated list of assets including equipment and revenue, along with a quick summary of your financials, which can help explain what numbers can’t.
“Numbers can only tell you so much, and I’ve had several clients where they just acquired five companies last year and their financials look terrible… Next year is going to be phenomenal, but in the meantime they’re going to take that dip and so having that summary for a landlord to say ‘oh, now I see why they took a dip this year even though they were so profitable the year prior. That makes sense, I’m comfortable with this.” -Brown.
Our next question for Bre was centered around individuals who have had bad experiences with tenant representatives, and therefore refuse to use them when looking for new spaces. As a broker herself, we wanted to know Brown’s perspective on why tenants should use representatives even after having bad experiences, and her answer provided a lot of clarity, centering around how a good representative will help you get the best possible deal, so that you can focus on your business rather than worrying about the condition of your lease.
“Because real estate is usually the second or third most expensive line item – so it is a very risky business decision to roll the dice on that particular economic component, one that is critical for your business.” – Brown.
While it’s true that anyone can tour a space with the landlord or leasing agent and sign the lease on their own, a tenant representative is there to help you remember and negotiate on lease components that may only be in favor of the landlord. Brown emphasizes on how much landlords love when tenants immediately sign leases without assistance because then they (the landlord) get all the deal terms they want, it will be in their favor, and you the tenant are not protected from any of it. It’s a good deal for them, but not for you. While it is possible for tenants themselves to get landlords to give a little on rent and walk away feeling satisfied, rent is not the only economic term that can hurt tenants down the road. Brown uses holdover as an example, which is something most clients don’t realize is a clause within their lease, and most likely do not realize the negative impact that it can have on them.
“A lot of clients don’t realize that there is a holdover clause in their lease term, so they might have language that is extremely unfavorable that says ‘if you holdover a day past your lease expiration,’ it doesn’t matter if you’ve talked to the landlord about this, if there’s nothing that’s been executed in writing prior to, then you could be paying 200% of your rent for base and operating expenses, when usually, if you had a broker, they would have negotiated a 150% of just base rent.” -Brown.
When it comes to finding a tenant representative, we wanted to know what sets JLL apart from other popular broker firms in Austin. While it is true that most firms more or less offer the same services, Brown argues that what sets JLL apart from their competition and that the biggest advantage JLL can provide for their tenants is their team.
“The top four brokers in the market, have consistently been JLL people: Will Douglas, Russell Young, Jon Childers, and Diana Holford. Every one of these people are at JLL.” – Brown.
Brown continues by elaborating on their team culture which welcomes collaboration and using each other’s experience and knowledge in order to help their clients. The JLL team is not afraid to openly ask each other questions in order to find the solutions that work best for their clients, and they value the specific needs of each individual client.
“It’s important for [tenants and clients] to know that real estate isn’t what they do day in and day out, so you need to have someone there with you to walk you through it and tell you what’s important and what’s not. At the end of the day you want somebody in your corner too, [because] the landlord already has somebody in their corner, and they usually have an entire team. This is what they do all day everyday – you need to be focused on your business… and you might as well bring in a professional that is willing to fight for you on your behalf.” -Brown.
To learn more about how having a tenant representative can help your transition to Austin, click here.
You can also connect with Bre Brown directly at firstname.lastname@example.org.
MORE ABOUT BRE BROWN
Brown grew up in Houston, Texas, and is a graduate from the University of Texas at Austin who got her start in commercial real estate by joining the University Commercial Real Estate Women’s Program as she pursued an architecture degree. Through this organization, Brown met Elysia Ragusa, who encouraged Bre to apply for an internship with JLL. Brown later went on to work part-time for JLL doing market research, eventually moving directly into a full-time brokerage position in 2014. Since then, Brown has become a JLL vice president and she continues to help clients negotiate the terms of a lease based on their needs.