By Ward Richmond
One of my favorite trilogies of all time is Back to the Future. Marty McFly is one of the best heroes, ever. I wanted to be the guy for most of my youth. Still do. He’s the reason I learned how to play the guitar. I owned the same Valterra skateboard that he skated on, and tailgated on the back of cars just like in the movie. I love Dr. Emmitt Brown. The man was a mad genius. 1985 Jennifer and 1955 Lorraine were possibly my first and second loves. How about Biff Tannin? He is arguably the best character of all not to mention a collegiate nickname for yours truly! Sometimes, and not in a good way, I feel like I am living in the movie Back to the Future: Part II. The one with the altered hell-future where Biff turned into Donald Trump on cocaine and Hill Valley turned into 1985 Compton. Why? Because even though it is 2017, some of the corporate tenants out there, ranging from international corporations to small family owned businesses still do not truly understand the massive value that can be created by partnering with a legitimate commercial real estate services provider. When I run across these companies, I can’t help but think that these C level executives and real estate directors don’t know what they’re doing. They attempt to negotiate real estate transactions without a strategic partner and might as well have bought a DeLorean with a flux capacitor from Doc Brown, and then went back to 1955 to learn how to develop their corporate real estate strategies. Don’t worry folks, I’m here to take you back, back to the future!
Commercial real estate strategy needs to be viewed as a rifle shot from a Seal Team 6 sniper, not a shotgun blast from Dick Cheney. Keep in mind that while the Seal Team 6 sniper may be the guy pulling the trigger, he does not work alone hence the “Team” in Seal Team 6! He has a high caliber team in place to support him throughout the process to accomplish the mission and execute with certainty – no pun intended. In the world of commercial real estate, our clients are buying a unique commodity that is an expensive long term, relatively illiquid obligation. When I say expensive, I mean several million dollars. In some cases, hundreds of millions of dollars. In my opinion, the best way to deploy such a large amount of capital in a value driven manner is to partner with an expert to help. I feel like this concept should be pretty simple to understand. Today, we are living in an age of specialists. I believe that in every profession, we have the benefit of having specialists out there who can add substantial value when it comes to strategy and execution of whatever it may be that these specialists specialize in. My suggestion to you is to utilize such professionals to generate value. In my opinion, if you are not engaging an expert to assist you in areas outside of your realm of core expertise, you are leaving time and money on the table. Not a little. A lot. Every single time. If I need an electrician, I don’t pretend to be one. I hire one. Not just anyone, the best one for the particular job. Same goes for my plumber. Same goes for lawyers and accountants. If I need a marketing brochure, I partner with a marketing specialist. If I need a logo, I hire a branding specialist. Website developer? Who do you think built this website? I can assure you that it was not me! Why would you not work with an expert? Cost? Living, breathing experts like me create value, not cost. This is not an empty promise. It is a fact and it is backed up by hard evidence. Please do yourself a favor and don’t negotiate directly with your landlord on your lease renewal. He is your buddy? Of course he is. He likes you because you are not using a real estate transaction expert to represent you! Think about it. He is your landlord. His fiduciary duty and interests lie with the Landlord’s bank account. Not the Tenant’s. Please do not hire your brother-in-law to rep you – unless he happens to be the best. Please do not hire a residential broker to help you with a commercial transaction. And vice versa. Hire the best guy or gal for the job. Think about this: why wouldn’t you work with the best real estate partner available to you? We all cost the same! It’s not like you have to pay double to use me because I am a badass. The guy fresh out of college with no experience and a real estate license gets paid the same market fee as me! This is crazy. Take advantage of it! Hire an expert.
If you have the mindset that all your corporate real estate partner can offer is help with locating properties, you are living in 1955 and you are leaving a lot of value on the table. You are either not utilizing your real estate partner to their fullest extent or you are not working with a true expert. If you don’t understand what else it is that we do, please call me. We need to sit down and have a chat. I think you will find it beneficial to build a strong, value driven relationship with your real estate partners that will be rooted in trust and mutual respect. Let me provide an example of how a true partnership can create value: My wife and I just bought a house this year. When we began the process, we hired Kelley McMahon, a world class East Dallas residential real estate expert to help us! – After years of looking for the right home, I wound up finding our new house before Kelley did and before it hit the market. Yes- I am that good! The first call I made when I found this new house was to my wife. The second was to Kelley. Sure- I found the house. Who cares? How many houses have I bought? This was my second. Do I know anything about buying houses? Absolutely not! I could have just called the seller’s agent and done the deal direct and taken 3% since I am a licensed real estate broker. Did I do this? No I did not. Why? For many reasons. First off Kel-Kel is a close friend of mine (I was a groomsman in her wedding) and she had been showing us houses for 2 years. Most importantly- she is a true expert. She is one of the best agents that works in the area where I live. She had also spent a lot of time up front helping me with my needs analysis. She assisted me with valuing my old house and helping me to analyze build versus buy scenarios. She introduced me to architects and home builders. She knew that I might just build a new house on my old lot and she wouldn’t get paid a dime. That didn’t stop her from adding value all along the way. Why? Because she is a pro. She added value – constantly. She helped me understand that certain elementary schools can swing home value by six figures! She explained minute details to me about the residential world, like the fact that having the master bedroom on the first floor of a two story home contributes to resale value. Who knew? So, for one thing, I didn’t want to screw her over because she is my friend and had already been helping me out (for free) for almost 2 years! That type of behavior might actually send a real estate guy like me straight to hell. That being said, being a “nice guy” isn’t the only reason I immediately called her to get involved once I found the off-market gem of a home. I wanted an expert in my corner to help me close the deal like a boss. I knew that I needed a true partner to help me maximize value and streamline efficiencies. That’s what I preach. That’s how I roll! As a corporate tenant representation specialist, I am well aware that finding the property is not rocket science. It is not our core value proposition. Finding the property falls into the commodity category. It is just one step in what should be a multi step complex strategic process that you develop and execute with a true partner. (INSERT PROJECT TIMELINE)
When I was ready to buy my new house, I recognized that I needed an expert to help me negotiate in order to maximize value and give me the peace of mind that I was not leaving any money on the table. You might think you know how to negotiate better than anyone. That may be true. Let me give you a pat on the back! Believe me, I know exactly how you feel! Being a negotiation expert is the primary reason why I understand the value in partnering with specialists to help me negotiate. I have negotiated hundreds of commercial real estate transactions in cities all over the world. On top of that, I have been involved in thousands of negotiations related to listing agreements, commission agreements, co-broker agreements, lease agreements and don’t forget exclusive tenant representation agreements! Basically, I am a certified negotiating machine! Despite the fact that I am an expert negotiator, I still knew I needed my residential agent to help me negotiate. Why? For one thing, she knew the seller’s agent. They were friends. This helps communication. Communication helps negotiation. She also knew the intricacies of the local residential marketplace. She knew the comps in the neighborhood better than I did. She knew how to negotiate a residential sales contract as it relates to the specific market that we were working in. We partnered together to negotiate the best deal possible. The results were phenomenal. This is how a true partnership is supposed to work.
I spoke to the real estate director at a major corporation the other day. They have about 50 distribution facilities across the US. This dude negotiates all renewals for all of these properties by himself with no help from a real estate partner. He claimed to have saved 5% last year via his negotiations which is why he does not feel like he needs to work with a commercial real estate partner. Sorry. I don’t buy it. Here is my question: how do you know that the alleged 5% in savings wasn’t supposed to be 15%? Did Loopnet confirm that for you? In my opinion, the only way to truly know the answer to that question is to partner with a true market expert and assemble a killer team. It will never cease to amaze me. Much like the Libyans keep coming after Doc Brown to get their plutonium back, I keep running into business owners and corporate real estate executives that don’t understand the value created by having an innovative commercial real estate partner on their team. When I hear a corporate real estate director say, “We handle this in-house,” it has the same effect on me as if a person tells me “Cigarettes don’t cause cancer.” I can’t help but shake my head. My grandmother would have responded, “Bless your heart.” If “handling it in-house” is your policy, there is a strong likelihood that you are leaving a shitload of value on the table. Please, give me an opportunity to prove it to you. What do you have to lose?
As we approach Q4 2017, it is time to start thinking about what innovative approaches you want to bring to the table in 2018 to drive value for your organization. As a reminder, if you are working with a top tier service provider who is a bona fide expert, they will create value, not cost! They improve efficiencies. Drastically. Financial analysis? Push it on your service provider! I promise, they will make it look tighter that you can. Proposal documentation? Push it on your service provider. What- are you a secretary? Negative. You are a strategist. Why are you wasting your time messing with drafting proposals? Lease administration? Push it on your service provider. Bill pay? Push it on your service provider. Expense reconciliation? You know what to do. Are you a transportation company or a real estate company? Are you an office supply company or a real estate company? Ecomm or real estate? Do you want to speak to 50 different landlords who you do a deal with once every 5 years or do you want to speak to 1 certified expert whose team does 50 deals a year with each of your landlords? Does it make sense for a macro strategy expert to attempt to understand local market conditions in an industrial submarket on the other side of the country once every five years? I don’t think so. A true, bona fide expert for a real estate partner will save you a lot of time and a lot of money. Our job is to make you look good. Our job is to make your life easier. If you are not utilizing this approach to drive value and maximize operational efficiencies for your company, you might want to give it some serious thought and bring that 1955 mindset Back to the Future.