The commercial real estate industry and its supporting services can be complex to navigate. That’s why our team at Cresa feels it’s important to reinforce that companies who lease or own their space deserve the best representation. In an effort to continue educating our clients and partners, we sat down with Cresa Minneapolis advisors Mitch Hugdahl and Elijah Wieberdink to get their perspectives on occupier services and the role they play in helping support growing companies.

Why is it important for growing companies to understand the difference between commercial real estate services and occupier-centric services?

Elijah: Occupier-centric services are focused solely on tenants of space, whether it be leasing or buying and occupying as an owner-user. Occupier-centric services gets rid of the conflict of interest that we see in the industry. Listing brokers, brokers who represent landlords, can take advantage of under-represented tenants by claiming they will have better rental rates if they do not use an occupier-centric firm. What they do not share, however, is the value that having representation can provide for the long-term health of their business. My colleague Ashley Moen said it best “The landlord is not your friend; they are in it to make as much money as they can. You need an experienced conflict free- advocate on your side to be sure you are best represented in the transaction.”

What role would you expect an occupier-centric firm to play in helping inform business strategies that lead to real estate decisions?

Mitch: As a broker working within an occupier-centric firm, the role is to help your client fully understand all aspects of their real estate requirement. There is no one-size-fits-all strategy when it comes to evaluating a company’s real estate needs. Every company is different, so you want to be sure that the needs of the client’s business are driving their real estate strategy and not vice versa. Occupiers use their real estate to effectively support their business goals and as an occupier-centric real estate firm, it is our job to help guide them to the most advantageous real estate solutions. With juggling the day-to-day responsibilities of owning or running a business, decision makers have enough to worry about. Being able to take as much of the real estate component off their plate is really where occupier-centric firms can add a lot of value.

If a company decides to lease a new space, what parties should be involved and how is compensation managed?

E: In a transaction there should always be four parties:

• Occupier/Tenant
• Tenant Representation Broker (occupier-centric firm)
• Landlord
• Listing Broker (landlord-centric firm)

Additionally, you may find a real estate attorney who reviews the legal components of lease terms. Project managers assist in space planning and facility assessment, to affirm the space supports the client’s business needs. Depending on the situation, you may bring in more parties to help assist with the assessment, such as an architecture engineer. Compensation for the tenant brokers will typically come from the landlord.

Beyond lease negotiations, what other services do occupier-centric firms commonly provide?

M: Services provided by occupier-centric firms vary depending on the size of the firm. Smaller boutique firms often focus on the brokerage or transaction management. Some may also offer additional services like project management/relocation management. Larger national firms usually offer a much wider range of services. These services could include project management, tax appeal services, lease administration, labor analytics, governmental incentives, site selection & location strategy, change management, relocation management, and technology solutions.

Most commercial real estate firms focus heavily on transaction management and less on other services, why do you think that is?

E: There is a lot of money in transaction management which is a huge driver for most brokers that are commission based. Many of the other services including property management, project management, tax appeal, incentives, etc. are viewed as additional services that can be added on to a client’s transaction based on need. In firms that do not focus solely on occupiers, these beneficial services likely sit across different departments and may not be discussed on each transaction. Occupier-centric firms discuss services that are applicable from the start of each relationship, leading to a more comprehensive service.

If a company has multiple locations across the US, should they consider a single firm to support them nationally or find local independent firms to help provide real estate services?

M: It is largely dependent on the number of locations. If a company only has a handful of facilities scattered around that country, then a smaller firm could likely handle it. However, if there are many locations, most companies would find it easier to work with a firm who has a national presence. Consistency and centralized communication is important to many businesses and having the same process in place across the organization is only possible if you work with a firm that has a national/international presence.

If you had one piece of advice for growing companies who have current and future real estate needs, what would you tell them?

E: Take the time to research which occupier-centric firms are best for your business needs. If you are an occupier, it is likely not a landlord-centric commercial real estate firm as their conflicts of interest may impede the service they can provide.

M: Real estate is not always top of mind for decision makers or business owners and understandably so, because they are busy growing and operating their business. However, the biggest piece of advice I would offer is to get out in front of your real estate requirements and start evaluating your options 18-24 months in advance. Even longer for larger requirements. Having time on your side allows for more options and better business decisions. It will also make the process a lot less stressful. Time can help create leverage which is essential for negotiating the most favorable terms possible for your business.