New Jersey Commercial Real Estate Andrew B. Zezas, SIOR President Business DRIVEN Real Estate...

Business DRIVEN Real Estate Solutions

New Jersey Commercial Real Estate

Andrew B. Zezas, SIORPresident

Presented by:

Andrew B. Zezas, SIORRelationship Manager, Strategist, President

REAL ESTATE STRATEGIES CORPORATIONNew Jersey

April 15, 2005

Tenant Representation Services: Generate Greater Revenue and Build More Profitable Relationships
















Agenda

Part One – Tenant Representation Services

• What Is Tenant Representation?

• Which Service Do You Offer?

• Transaction Brokers vs. Advisors - Who Hires Them?

• Competing Against Dual Service Brokers

• Required Traits

• Compensation

• Getting Hired

• Representation Agreement

• Are You Really…?




Agenda

Part Two – Tenant Rep Forum

• 3 Expert Panelists

• Questions & Answers

• Tenant Rep Stories

• Selection of “The Best Tenant Rep Story”




What Is Tenant Representation?













Questions:

Do Tenant Representatives Represent:

• Only Tenants?• Corporate Occupant Buyers?• Acquirers of office space only?• Acquirers of industrial space?• Acquirers of retail or other real estate?• Landlords?





“Tenant Representative” is an incorrect term!

Questions:

Are you a Tenant Representative if you:

• dispose of corporate properties?

• Represent corporate property buyers?





If you represent:

• only companies seeking to acquire space, then you specialize in:

Real Estate Acquisitions

• the full real estate interests of your corporate clients (acquisition, disposition, and advisory services) then you specialize in:

Corporate Services








Which Service Do You Offer?

Real Estate Acquisition Specialist

Corporate Services Specialist

Transaction Broker

Advisor




Which Service Do You Offer? Transaction Brokers

Serve companies that:

• Have completed long range projections

• Understand their business and real estate needs

• Don’t require real estate advice

• Don’t require strategic planning services

• Have a basic knowledge of local business and real estate climate

• Are transaction oriented

• Know what they need and what their financial requirements are




Which Service Do You Offer? Transaction Brokers

Value Proposition:

• Market knowledge driven• Have substantial transactional experience• More traditional in their approach• Understand pros and cons of buildings• Offer expertise and track record• Skilled Negotiators• Understand leases• Maintain relationships with other service providers• Often engaged by real estate, facilities, mid-level• Move quickly• May also offer landlord services• Can offer local, regional, or national services• Commission based




Who Hires Transaction Brokers?

• Entrepreneurs– Want to “make a deal”

• Corporations with structured real estate departments– Have defined business and real estate requirements




Which Service Do You Offer? Advisors

Serve companies that:

• Have not completed long range projections• Do not fully understand the connection between their

business and real estate needs• Require real estate advice• Require strategic planning services• Have little knowledge of local business and real estate

climate• Are not transaction oriented• Are uncertain of what they need and what their financial

requirements• Seek to manage risk• Require guidance for intelligent decision making




Which Service Do You Offer? Advisors

Value Proposition:

• Similar expertise to Transaction Brokers• Strategic planning• Operational and financial analysis • Business strategies as a foundation for real estate• Analytical expertise• Board savvy• Often engaged by C-Level• May not have local expertise• Provide reports and deliverables• Focus on minimizing corporate risk• Commission and / or fee compensation




Who Hires Advisors?

• Management oriented entrepreneurs• Corporations without structured real estate

departments• Small to mid-cap companies• Management team leadership• Entrepreneurial companies with sophisticated

owner / investors• US operations of foreign-owned companies




Which Service Do You Offer? Transaction Brokers and Advisors





In a local, regional, or national markets can you be effective as both a:

• Landlord Representative

and

• An Acquisitions Specialist /

Corporate Services Specialist?





Does Landlord Representation =

Acquisitions Specialist /

Corporate Services Specialist?

Can You Provide Both Services… IN THE SAME TRANSACTION?

NO!




Competing Against Dual Service Brokers

• Property oriented brokers who also pursue acquisition Property oriented brokers who also pursue acquisition assignments are Dual Service Brokersassignments are Dual Service Brokers

• Value propositions:Value propositions:– Better handle on the current market activityBetter handle on the current market activity– Know other tenants in the marketKnow other tenants in the market– Know what landlords’ bottom lines because they represent Know what landlords’ bottom lines because they represent

themthem– Better access to changes in market data and activityBetter access to changes in market data and activity– Stronger landlord relationshipsStronger landlord relationships– Chinese WallChinese Wall









Acquisitions or Corporate Service Specialists are:

• Not beholden to any property or landlord• Aren’t interested in future opportunities

to represent landlords’ property• Have a binding legal, fiduciary, moral

obligation to protect acquirer’s interests• Only service line “All we do!”• Reputation is on the line with every

client and every project




Required Traits Acquisitions or Corporate Services Specialist

Minimum

• Market knowledge

• Track record – acquisitions

• Reputation

• Integrity, honesty

• Transactional creativity

• Negotiation skills

• Service provider relationships

• Respect





Differentiation

A defined process that can be built to support the client’s business objectives and clearly demonstrates that corporate decision-makers will:

• Be able to make intelligent decisions about real estate and their business

• Be informed of critical information in advance of deadlines and decision dates

• Feel confident that you will protect their interests and those of their company

• Know that you are skilled in representing acquirers of real estate





Differentiation


• Know that they’ve engaged a professional of high caliber who is respected by his/her opponents and who commands authority in the market

• Receive recommendations from you as to additional service providers required to successfully and cost-effectively complete their project

• Trust in your ability to build and manage an effective team of service providers





Differentiation


• Be required to expend as little time as possible• Encounter few conflicts of interest • Minimize personal and corporate risk• Decrease likelihood of legal entanglements• Know you’re not experimenting on their project• Expect creative solutions to complex problems• Be secure in your recommendations and guidance• Feel confident recommending your solutions to senior

management and the Board of Directors





Differentiation


• Be enhanced by their relationship with you

• Achieve a flexible, productivity enhancing, real estate transaction that supports their business objectives and promotes corporate profitability




Compensation

• Transaction Broker– Typical local market standard

• Advisor– Consulting fee

• Hourly• Monthly retainer• Flat fee• Formula (Percentage of savings)

– Commission

• Disclose your commission structure• Demonstrate your value – Are you worth a discount?




Compensation

• Disclose your commission structureDisclose your commission structure

• Demonstrate your value – Demonstrate your value – Are you worth a discount?Are you worth a discount?

• The more service(s) you offer, the more valuable you will be The more service(s) you offer, the more valuable you will be to your clientsto your clients

• The more valuable you are, the less likely that they’ll The more valuable you are, the less likely that they’ll devalue your service and seek compensation discountsdevalue your service and seek compensation discounts

• Decide how much you service is worth and price it Decide how much you service is worth and price it accordingly.accordingly.




Getting Hired

• Never sell an Exclusive!!!

• “Exclusive” means to exclude. Why would anyone want to exclude themselves from anything?

• Provide your clients with a representation agreement that memorializes the details of your relationship.

• If, by the time you present an agreement, you haven’t demonstrated the value you’ll provide…then, why would they hire you?




Getting Hired Obstacles

When the client:

• Thinks they’ll pay double commissions• Won’t sign an agreement• Prefers to use multiple brokers• Would rather keep all options open• Wants to work directly with landlords• Has a relationship with current landlord• Spouse sells houses




Getting Hired Why Should Any Company Hire You?

As an Acquisitions or Corporate Service Specialist, you offer:

• No (or few) conflicts of interest

• Concentrated effort with little or no distractions

• Elimination of properties that don’t meet client’s parameters

• Client’s ability to avoid seeing buildings twice

• No sales pressure from a broker who’ll only earn a living if the client selects a particular property

• Objective opinions about property, owners, etc.

• Opportunity for the client to even the sides

• Reduction or elimination of broker conflicts




Getting Hired Why Should Any Company Hire You?

As an Acquisitions or Corporate Service Specialist, you offer:

• Opportunity to get to a “deal” quicker

• Respect by landlords

• No allegiance to landlords

• Advise in decision-making

• Professional analyses, reports, deliverables

• Written recommendations

Ask your client what could happen if they don’t engage professional services.




Representation Agreement

• Never work without a written authorization agreement…Few executives do!

• Spell-out your obligations to your client and your client’s obligations to you

• Your written agreement should clearly state the parties “agreement” to avoid misunderstandings

• Protect your client and yourself

• Two honest people can misunderstand each other!




Are You Really An Acquisition or Corporate Services Specialist?

• Do you promote yourself / your company accordingly?

• What does your website say?

• What does your business card say?

• What do your promotional materials say?

• Do you have property signs all over town?

• Do you talk about properties you sold or clients you represented?

• Do you have an appropriate track record?

• Do you represent landlords?




Summary








Tenant Rep Forum

• 3 panelists will make brief presentations about their Acquisitions and / or Corporate Services models

• Open Discussions (Q&A)

• Best Tenant Rep Stories Award




Tenant Rep Forum




Tenant Rep Forum




Gregory P. SchenkThe Schenk Company

Office Specialist

Columbus, Ohio




J. Leonard CaldeiraThe Staubach Company

Industrial Specialist

Chicago, Illinois




Donald C. CatalanoCorporate Realty Consultants

Office Specialist

Comack, NY

• CCIM, MCR, SIOR




Tenant Rep Forum

Gregory P. Schenk

Office SpecialistThe Schenk Company

Columbus, Ohio

J. Leonard Caldeira

Industrial SpecialistThe Staubach Company

Chicago, Illinois

Donald C. Catalano

Office SpecialistCorporate Realty Consultants

Comack, New York

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