Frequently Asked Questions
Disclaimer: The information contained here is intended to provide information and insight to industry practitioners and does not constitute advice or recommendations. Royal Commercial Corp. disclaims any liability for action taken as a result of this publication.
Q1. How does the commercial real estate (CRE) industry work?
Most owners/landlords of commercial real estate hire real estate agents to lease their property on their behalf. The real estate agent’s responsibility is to represent the owner in leasing the property; not to represent the tenant. Washington state law requires real estate brokers to disclose in writing exactly who they will be representing during the CRE transaction. RCW 18.86.120. This works the same when buying or selling commercial real estate.
Q2. How are CRE professionals paid for their services?
CRE agents receive a commission upon the signing of the lease between the owner and a tenant. The amount of the commission is most often calculated as a percentage of the lease value, which is negotiated between building owner and the CRE agents involved. There is no set industry standard. The owner of the leased building pays the agents commission; typically, one-half on the signing of the lease and the remaining one-half when the tenant begins occupying the building. When selling commercial real estate the brokerage firm is paid commission at closing.
Q3. What is the difference between a leasing agent and a tenant representative?
The leasing agent has the listing of the property and represents the interest of the owner of the building. A tenant representative (rep) represents the interest of the tenant in the lease. Some agents work exclusively on listing while others take on tenant representation only. Other agents will work with both. This is the same when buying and selling commercial real estate.
Q4. Why should I use a broker (agent) if I have an attorney?
A knowledgeable broker, who is a vital part of your team of professionals, uses comprehensive marketing expertise and valuable resources to ensure maximum results in every lease and sale transaction. Using an experienced brokerage firm will compliment the rest of the team allowing others to do what they do best in their profession.
Q5. Do I need a broker to help me find space?
No. Whether buying, selling or leasing, anyone can search for space if they have the time to spend away from their business. A broker however, does so much more than just find office space. A broker uses expertise in the leasing negotiation process and the same would apply to the buying and selling process. A broker starts with a good understanding of your business and gives you advice as to the best space suited for your business. A broker then uses inside resources to locate the best space available that offers a good deal. A broker seeks out the best terms and rental rates during the negotiable process. A broker stands beside you from the time the search begins until the lease is signed and the same applies in buying or selling commercial real estate.
Q6. I’m thinking about moving my office or leasing a new office. Where do I start?
The first thing is to decide if moving into a new space is the right choice. Whether you are looking to buy or lease, ask the following questions:
Do we want to find space on our own or hire a tenant representative to assist us?
Is it a good time to move?
How important is location?
How much space do we need?
How much can we afford?
On what date do we need to move into a new space?
How will the new space benefit the company and its future?
What does it cost to move?
What else is involved in moving (furniture, phones, computers, copy/fax/postage machines, internet access, etc.)?
Can we afford to lose business or employees during the transaction?