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In the Philippines, only a number of businesses hire a tenant representative when searching for an office, retail, or industrial space. Business owners, especially of SMEs, are often hesitant to delegate the task of finding a new space to a broker because they do not want to spend for brokerage fees or any other expenses associated with hiring a tenant rep. Some owners also feel that their business is too modest to need tenant representation.
More value than businesses think
By hiring a tenant representation broker, companies can enjoy lower rental or purchase costs and expedite the search for the right office space. Brokers know the ins and outs of the market, making them effective negotiators. They also have the capability to narrow down locations that would fit your business. Having a real estate broker that represents you exclusively will also ensure that your interests are protected, especially when it concerns legal documents and property inspections.
To show you how much your business stands to gain from hiring your own broker, we have debunked some of the common misconceptions as well as enumerated benefits of tenant representation for large-scale companies and small to medium-sized businesses:
1. Tenant representation is costly and is therefore, an unnecessary expense.
On the contrary, tenant representation actually helps businesses save on rental costs and the costs of finding a new office space. Brokers perform all the legwork, from setting meetings, scheduling site visits, handling the negotiations with real estate sellers or landlords, and writing contracts. With their help, owners get to spend less time handling their real estate transactions, so opportunity costs are kept to a minimum. What's more, it is common practice in the Philippines for landlords to pay for the commercial real estate brokerage fees or commissions to get a good credit and qualified tenant. This means that for businesses leasing or purchasing properties, there are often no costs involved in hiring a tenant rep.
2. SMEs do not need a broker to find office space, given that their requirements are often small.
This does not apply to foreign entrepreneurs or expats setting up shop in the Philippines, where real estate transparency is a major issue. You would need a broker more than ever who will help you navigate through the maze of landlord tactics as well as Philippine policies and legislation to minimize risk and hidden costs. He or she would also be able to provide details about the advantages and disadvantages of serviced offices and traditional office spaces and opening offices in certain locations, ensuring you find a safe and accessible commercial space that caters to your business size and needs.
3. There are several listings available online, so there is no need to work with a tenant representation broker to look for office space.
True, there are now several websites that offer listings for free, but verifying information from these listings might be challenging -- it is possible that the information posted online is outdated and inaccurate. There are also limited choices when it comes to commercial spaces or properties listed online, as most commercial properties are advertised off-market and are sold within business and commercial broker networks.
When it comes to buying or leasing office or commercial space for your business, mistakes equate to loss of money, which poses an impact to your business' performance and cash flow. Make sure you hire a tenant representation broker whom you can trust -- someone with an extensive network in commercial real estate and capable of narrowing down properties that meet your requirements. With his help, you can get the best value property and eliminate financial surprises down the road.