There are different types of brokers in the industrial real estate industry. Here we highlight the differences between two key types – multiple representation and tenant representation.
To fully recognize the benefits of a tenant rep brokerage, you first must understand the implications that could arise in a multiple representation scenario.
Multiple representation in a real estate transaction is exactly what it sounds like, a single real estate brokerage representing both the landlord (or seller/developer) and an end-user (lessee/buyer).
To some, this may not be a complication, but the reality is both the landlord and the end-user have different needs and requirements. This creates a divided interest between the 2 parties due to their competing demands.
The ramifications of not having objective conflict-free advice may increase the probability of tarnished relationships.
As an end-user, to avoid multiple representation in its entirety, a lessee or a buyer can partner with a brokerage, or real estate broker, that specializes in tenant and end-user representation.
Depending on the scenario, many benefits can be uncovered for an end-user:
1. A tenant rep agent works for the end-user and end-user only. Being able to negotiate lease terms with an undivided interest gives the tenant some added leverage as their agent is an extension of them, not the competition.
2. Brokers who only represent end-users, may have more experience dealing with onerous landlord clauses, and ways to meet landlords at a reasonable, middle ground. This gives them the ability to make more intelligent decisions that will create leverage and lease flexibility for an end-user.
In all cases, a brokerage needs to put forth the needs and interests of their clients. As a traditional brokerage can represent 2 sides of a transaction potentially leading into multiple representation, a tenant rep brokerage may offer more specific and less conflicting services.