Tel: 616-233-8019

161 Ottawa Avenue NW, Suite 100, Grand Rapids, MI 49503

Michigan Commercial Space Advisors Is...

  • Dedicated Exclusively to Tenant and Buyer Representation
  • The only full service commercial broker between Detroit and Chicago who does not list property for sale or lease for owners
  • Uniquely unbiased and  completely independent... we have nothing to sell !
  • Focused on Office, Retail and Light Industrial property types
  • Based in West Michigan but available for assignments throughout Michigan

Tenant/Buyer Representative

What exactly does a Tenant/Buyer Representative do?


 

Every tenant rep assignment is custom-tailored based on the tenant's specific situation. However, all such assignments share a number of common steps. The following is a typical representation assignment outline (note - "MCSA" is Michigan Commercial Space Advisors).

 

  • Initial meeting to discuss client's needs and determine whether we can help them
  • Client fills out needs assessment survey
  • Client and MCSA review needs assessment and decide on search criteria
  • MCSA searches market for listed and unlisted properties which meet client's search criteria
  • MCSA reviews universe of qualified opportunities with client to decide which to tour (target is 4-8 properties)
  • MCSA sets up the site tour and prepares detailed tour package for client
  • Client and MCSA meet to review tour notes and narrow prospect list town to 2 or 3 options.
  • MCSA submits RFP (Request for Proposal) to 2-3 finalist landlords.
  • MCSA reviews Landlord proposals, prepares comparison grid, and meets with client to review options
  • MCSA confirms final list of required improvements to suite
  • MCSA requests draft lease from Landlord at preferred location
  • MCSA reviews draft lease with client and forwards to client's legal counsel for technical review
  • MCSA coordinates communication between client and Landlord until client occupies leased space
  • MCSA attends post-construction walk-thru and assists client with any follow-up required
  • MCSA provides lease documentation package to client for future reference

 

Based on our previous assertion that a typical tenant rep assignment takes 40-70 hours of our time, you can see that the preceding list is fairly abbreviated. It also does not touch on the various ancillary services which might be required or appropriate (see here for a list of some of those services). The key benefit to our process is that it segregates responsibilities based on expertise – we do the all work and bring you filtered, qualified results, while you spend your time doing what is most productive - making the decisions.

 

Also not mentioned above is the specific process we use to help you understand what your out-of-pocket occupancy costs will be. I am a big proponent of analyzing available options on an "apples to apples" basis. This is done by adjusting all properties for items of dissimilarity. The best way to illustrate this method is by example. Let's say you are considering two different spaces for lease, with the following characteristics:

 

Space #1 – 2,645 rentable square feet, $8.00/SF rent.

 

Space #2 – 2,530 rentable square feet, $12.00/SF rent.

 

On the surface, Space # 1 appears to be preferable – it is larger and has a lower rent/SF. However, the devil is in the details. As it turns out, Space #1, has 2,645 rentable square feet but only 2,300 useable square feet and is being quoted on an "as is" basis with expenses paid on a triple net basis. Space #2 encompasses 2,300 useable square feet and is located in a new building so the quoted rent is "turn-key". Moreover, expenses are allocated on a gross basis. What does this all mean? See the definitions page for a better explanation of what some of these terms mean. Adjusting these two listings for items of dissimilarity would result in the following comparison:

 

Space #1 – Adjustments are necessary for expenses, improvements, and the common area factor. Expenses paid by the tenant will include taxes, insurance, common area maintenance, janitorial and utilities. These expenses are estimated to total $6.00/RSF. The cost to improve the suite to suit the tenant's requirements is $12.00/SF, which, if amortized over the 5 year initial base term, would add $3.00/SF annually to the base rent. The common area factor is 15% (2,645 RSF divided by 2,300 USF = 1.15). The full gross occupancy cost per rentable square foot is then calculated as follows: $8.00/RSF base + $6.00/RSF for expenses + $3.00/SF for improvement amortization = $ 17.00 per rentable square foot. Converting that to a useable rent is calculated as follows: $17.00/RSF multiplied by the rentable factor of 1.15 = $19.55 per useable square foot.

 

Space # 2 - Adjustments are necessary for expenses and the common area factor. Expenses paid by the tenant will include only suite electrical use, estimated to be $1.00/RSF. The cost to improve the suite to suit the tenant's requirements is zero, since this is a new building and the space is being offered on a "turn-key" basis. The common area factor is 10% (2,530 RSF divided by 2,300 USF = 1.10). The full gross occupancy cost per rentable square foot is then calculated as follows: $12.00/RSF base + $1.00/RSF for expenses + $0.00/SF for improvement amortization = $ 13.00 per rentable square foot. Converting that to a useable rent is calculated as follows: $13.00/RSF multiplied by the rentable factor of 1.10 = $14.55 per useable square foot.

 

As you can see, the unadjusted rents suggested a highly favorable rate for Space #1, while adjusting each for items of dissimilarity reveals that the opposite is true. This is just another example of why it makes sense to be represented by a qualified and experienced professional in your search for rental space.

 

There are several other things we do to add value to a tenant rep assignment. One thing we pride ourselves on is being able to take a potentially complicated process and break it down into easily understandable terms. Our passion for doing so has evolved over the years as we have been involved in a number of meetings with high-level executives. The assumption is often made that an executive is knowledgeable on all subjects. As a result, people making presentations or communicating with a group of executives will often times make broad assumptions regarding specific knowledge and, as a result, end up "talking over the head" of some or most of the participants. The bigger problem in this scenario is that many executives are embarrassed to admit that they are not fully knowledgeable on a particular subject. As a result, they don't speak up, and potentially miss out on an important message.

 

Another valuable byproduct of working with a Tenant Rep is that we can do a good job of insulating you from sales pitches. The real estate brokerage industry can be a very lucrative career path. As a result, it attracts its fair share of aggressive salespeople. Once it becomes known that you are looking to rent space, you will be routinely contacted by agents wanting to show you the space they have listed. These calls, if answered, can be very disruptive and time-consuming. If you are working with us, a simple statement regarding our status as your representative will serve to route all calls through us (and away from you).