Firing Your Commercial Real Estate Agent

Most agents deliver on the expert commercial leasing advice you are looking for, but there are exceptions.  We tend to hire on likeability and fire on credibility.  Unfortunately with suppliers, they do not co-habitate your office space with you so you have to less information to work with on making your decision to sever the relationship.  Here are the tell-tale signs it is time to move on from your commercial real estate agent:

You Are Finding Most of the Spaces

With free internet resources like 42 floors, officespace.com and Loopnet tenants can directly find spaces on their own and discover some properties before their commercial real estate agent. 

While it is not ideal for you to search for spaces all day (that is why you hired your commercial broker to begin with), you may want to casually send some listings to your broker that you found on the internet.  This will keep your agent on her toes. 

Cut your broker some slack - it is not easy to keep up with every single listing that hits the market daily...just because you found it first does not mean she was not going to find it shortly after you.  But if you are consistently finding more options than your broker than clearly she is either too busy or not interested enough.  Half of the value she brings to the table is in finding the space. 

Your Agent Seems to be Playing Favorites

Commercial real estate is riddled with conflicts of interest.  Since most of the money made by brokers is from representing landlords (not tenants), they try to please the landlords that they either have relationships with or want relationships with. 

The most obvious conflict is if you hire Bill to find you a new space and he is only showing you properties that he lists, then it is clear he wants to put you into one of his own buildings.  Not only will he be pleasing one of his landlord clients, but he will also make a double commission through dual agency.  He will make the listing broker fee and the co-operating broker fee.  A nice way to double dip. 

The less obvious conflict is the future listing business Bill is trying to get.  If none of Bill's buildings work for you, he will move on to showing you other buildings, but he may prioritize them according to his future gain. 

For example, if there are two comparable spaces that could suit your needs and Landlord A has a reputation for hiring listing brokers from time to time and Landlord B does their own leasing in house, Bill would prefer you to rent the space from Landlord A.  After the deal is done Bill can get to work on convincing Landlord A to hire him for one of Landlord A's buildings that may need some marketing assistance. 

This secondary conflict is harder to pick up on, but if you notice that you are seeing plenty of Landlord A's buildings, be careful.  Keep in mind that if Bill is thinking about landing Landlord A as a client, just how hard is he going to push once you have decided to start negotiating on space in Landlord A's building?

Lack of Responsiveness

Captain Obvious calling.  Given that commercial real estate agents work for a commission at the finish line, it generally separates them from many other suppliers that are paid, by you, as they go. 

Agents are paid, by the landlord, only if a deal happens.  For this reason they should either be highly engaged (if they are fired they get nothing at all), or they reach a point where they think a deal is not going to happen so they pull back. 

Most commercial real estate agents are highly responsive at first.  If you notice your agent start to become less engaged, it is a sign that you will end up missing space opportunities and they may also mail it in when it comes to negotiating a strong deal for you. 

Market Knowledge

Even seasoned agents will enter buildings they have never been in before, but does this happen often?  Does your agent know the listing agents on space tours, or does he have to introduce himself every time?  Does your agent offer any insight on each building or landlord (for example, who are the other tenants), or is he learning as much as you at each building tour?  Ask your agent if he has ever done a deal in each building or at least with that landlord. 

If you see any of the above warning signs then your commercial real estate agent likely does not have a strong pulse on where your rent should end up.  In that case, your agent will end up getting the market information for the building directly from the landlord, not from experience.

Reactive vs Proactive

When was the last time you received so much information on a building tour that you did not have any questions?  Was it all provided by the commercial listing agent or was it your agent that provided all those details before the tour?  If your agent shows up and does not have the marketing flyer or floor plan for each building, it is a good sign they are winging it. 

While most listing agents will bring those materials for you, you did not hire the listing agent to represent you.  Has your agent provided qualitative and quantitative comparisons of the buildings you have toured?  If not then he is trying to take short cuts, hoping you will pick a building soon so he can put in an offer and get to the commission check sooner than later.

A frank discussion with your agent about any of the above will be more fruitful than an immediate firing.  It could be that your agent has become overwhelmed with other projects and genuinely feels bad about a drop in their service level.  It could also be that they do not feel that your project will end up happening, in which case you likely will not be able to mend the relationship and it will be best to mutually part ways.

Best of lucking figuring out whether or not you should fire your commercial real estate agent!