With tough times come dirty tricks
By Peter Scott | Property Leasing | Tuesday 1st September 2009
Desperation is biting in the commercial real estate industry.
There are very few commercial tenants looking for space right now, and many agents that specialise in commercial leases are consequently struggling.
With tough times come dirty tricks.
One ploy that is on the rise is where a real estate agent representing a tenant looking for new space will go into negotiation with the tenant’s existing landlord, seeking a commission from the landlord to have the tenant stay and at the same time taking a cut from the tenant for representing the tenant.
This is a despicable case of double dipping. Not only is it unfair, it can really sour relationships between landlord and tenant.
One property manager representing a landlord recently told me of an occasion when this had happened. It hugely annoyed him for two reasons; firstly he considered he could have dealt directly with the tenant who need not have incurred the cost of the real estate agent, and secondly he as landlord ended up having to pay the agent’s commission if he wished to retain his tenant in a competitive environment.
We’re also seeing occasions when real estate agents consider they “own” a tenant, even without a contract to exclusively represent them. There can be real fracas when two agents in one firm are both trying to close a deal with different properties for a tenant.
Many people don’t realise it but New Zealand lags behind the rest of the world when it comes to negotiating commercial leases. In most Western countries, there are property specialists who represent either landlord OR tenant, and who never cross the line between the two.
There is a real lack of clarity for both sides in New Zealand and this allows the double dipping mentioned above to occur, not to mention the rampant conflicts of interest.
It is high time we got this clear. I think it serves people to know when they are getting independent advice, versus the services of an individual or organisation that may well represent both sides in a potential negotiation.
Who REALLY represents your best interests?
As a footnote, those readers who are familiar with Parallel Directions will know we are fiercely independent, avoiding any potential conflict of interest. Our clients recognise their best interests are always served by our adherence to serving them solely, and not any other parties (i.e. landlords) they may wish to enter into negotiation with.
Tags: commercial property lease negotiation, commercial property leasing, commercial real estate, landlord negotiations, lease negotiating, property lease negotiating, Property Lease Negotiation, Property Leasing, real estate agents, recession property strategies, tenant & landlord negotiations
