The basics
Do you need a tenant rep?
For many businesses, choosing a tenant rep is one of the most valuable decisions in the leasing process. A good one brings market knowledge, negotiating leverage, and management of the deal from start to finish.
A tenant rep’s fee is typically paid by the landlord.
Going without a broker does not usually save you money. The commission typically stays on the landlord’s side, and you negotiate without an advocate.
The mechanics
How lease commissions work
Landlords typically budget for brokerage commissions, whether or not you have representation.
Landlord’s leasing budget, including the commission.
Without a rep
The tenant stands alone
- The landlord’s broker typically collects the full commission.
- You negotiate on your own.
With a rep
The tenant has an advocate
- The commission is typically shared between the landlord’s broker and your tenant rep.
- Someone at the table works for you.
Walking in without your own broker is like buying a home without a buyer’s agent. The other side has professional representation.
Who is on your side
Landlord rep vs. tenant rep
| Landlord rep | Tenant rep | |
|---|---|---|
| Represents | The property owner | You, the tenant |
| Owes duties to | The landlord | You |
| Goal | Highest rent and best terms for the landlord | Lowest total cost and best terms for you |
| Market coverage | Typically focuses on its own listings | Can cover the whole market |
| Typically paid by | The landlord | The landlord |
| Conflict of interest with you | Yes | None, when they represent only you |
Don’t expect the landlord’s broker to advocate for you. Their job is to represent the owner. Ask how any dual agency would be disclosed and handled.
Going it alone
The risks of negotiating without a rep
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Experience gap
Landlords negotiate leases all the time. Most tenants negotiate one every few years.
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Limited market data
Landlords see vacancies and comparable deals. Unrepresented tenants often see only the asking price.
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Missed concessions
Free rent and TI allowances can be left on the table by tenants who didn’t know to ask.
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Unfavorable lease language
Landlord-drafted terms can include broad personal guarantees, vague operating expenses, and no termination options.
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Time burden
Research, tours, and financial modeling take significant time away from running your business.
Start to finish
What a good tenant rep does at each stage
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Stage 1: Strategy
Aligns space with headcount plans, operations, and budget, and models usable vs. rentable square feet so you don’t pay for space you won’t use.
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Stage 2: Total cost comparison
Searches the whole market, including off-market space and subleases, and compares total occupancy cost: escalations, operating expenses (gross, modified gross, NNN), parking, free rent, and uncovered build-out.
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Stage 3: Competitive tension
Creates competition among landlords to improve concessions, and negotiates flexibility such as expansion rights (right of first refusal or offer), contraction, and sublease rights.
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Stage 4: Transition
Introduces architects, oversees contractor bids, coordinates the move, and lines up the new lease with your current expiration to avoid holdover.
The outcome
What a negotiated lease can include
Starting from the landlord’s asking terms, a tenant rep negotiates toward a true market deal.
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Lower rent
A base rent below the landlord’s asking rate.
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Free rent
A period of abated rent at the start of the term.
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TI allowance
Landlord funding for your build-out or refresh.
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Risk protections
Operating expense caps and favorable expansion rights.
Results vary by building, market, and term. Ask any rep for examples from recent, comparable deals.
Illustrative scenarios
Leverage comes from real alternatives
Two illustrative scenarios, not specific client results.
Office renewal
Turning a renewal into a negotiation
- A professional services firm assumed its landlord would offer a standard renewal rate.
- Its tenant rep mapped viable relocation options and presented them to the current landlord, creating real pressure on rent, free rent, and the improvement allowance.
Industrial new lease
Using a competing property
- A logistics company was ready to sign at the landlord’s asking rate.
- Its tenant rep identified a competing off-market property and used it as leverage to negotiate rent, free rent, and the TI allowance.
Renewals are not automatic. Landlords have little reason to offer their best terms unless they know you have credible alternatives, so run a market search alongside any renewal talks.
Myths
Three common myths about tenant reps
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Myth: I can negotiate this myself.
Most business owners negotiate a lease every few years. Landlords do it constantly, and the experience gap tends to show up in the final economics.
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Myth: A broker only helps find space.
Finding space is just the beginning. Reps also handle financial modeling, LOI negotiation, lease review, and execution.
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Myth: Reps are only for large corporations.
Small businesses often benefit the most, because they have less negotiating experience and market data to draw on.
Timing
When to engage a tenant rep
Many advisors suggest starting 12 to 18 months before your lease expires, before you tour buildings or contact your current landlord.
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12 to 18 months out
Engage and plan
Bring in a rep early so urgency doesn’t drive your concessions.
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9 to 12 months out
Survey the market
Map options, run financial comparisons, and develop real alternatives.
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6 to 9 months out
Negotiate
Work through LOIs, allowances, and protective lease language.
Urgency favors the landlord. Time favors you. Renewals and complex medical or industrial projects may need more lead time.
Checklist
What to look for: a tenant rep checklist
- Exclusive tenant representation Represents only you in your deal, confirmed in writing.
- Clear compensation Explains in writing how they are paid and by whom.
- An active real estate license In Arizona, check it on the Department of Real Estate public database. Arizona Department of Real Estate public database (opens in new tab)
- Local market data Current vacancy, asking vs. effective rents, and recent comparable deals for your submarkets.
- Whole-market search Covers off-market space and subleases, not only promoted listings.
- Total occupancy cost modeling Side-by-side comparisons of full cost, not only base rent.
- A negotiation plan Explains how they will create competitive alternatives, including on a renewal.
- Clear deliverables Market survey and RFPs, a proposal comparison matrix, cost projections, and a plain-language lease abstract.
- Full-lifecycle help Stays with you from strategy through lease review, build-out, and move.
- Relevant experience Has worked on spaces like yours: office, medical, industrial, or retail.
