Stan Mullin specializes in the sales and leasing of industrial land and buildings in southern Orange County, California. His areas of expertise include: entitlement, contract language, construction schedules, development, assessment district and community facility district bond financing.  

Landlord Representation

Author: Stan Mullin, CCIM, SIOR

As we approach the 21st century, it’s a great time for us to look at how our responsibilities to landlords and sellers have changed over the last 10 years and what our task will likely look like between now and the end of the decade.

Our customer’s needs and our work have taken a new look in a litany of fields, but I reduce it down to these key issues:

TECHNOLOGY

It hits us in the face every time we turn around...but do we really take advantage of it? These are a couple of ways that we as office and industrial brokers can use our computers to meet the needs of our landlords and sellers, save time while avoiding the common pratfall of becoming “propeller heads” and losing sight of the most important aspect of our business... people.

Prospecting - Isn’t the primary reason we are hired is to find the prospect? With the advent of databases we can buy or lease, either on disc or download via modem, we can select the geographic target market, business type (S.I.C.), by number of employees, business age or by revenue, etc. Our lists can be in sequence by address, for direct mail by zip code (your local post office will add the 4 digit extensions to your disc for free) and many services now highlight those key executives that have changed responsibilities (have been “replaced”) so we can focus our efforts on the decision makers that may have a new motivation to change the company’s real estate holdings. 

Today we can buy software off the shelf that allows us to highlight the number to call and auto-dial out (ie. Hotline 206-483-4555). The time saved is incredible! E-mail....why not e-mail an executive you want to reach? The chances are good they receive tons of mail, have 25 phone messages to return and numerous faxes to peruse, but your the only real estate person that has ever left a message in their “in box” and sent them something of value.

Documentation - When we are drafting a response to the co-operating agent (or the prospect), it’s far more efficient when we send our draft for their review, via-modem. Faster, private and more legible than a facsimile, the recipient can quickly make modifications in their PC, sign it (their signature can be scanned in) and send it back in... no time! When drafting a “counter”, the business terms we recommend to the landlord/seller should be underlined, typed in bold typeface or italicized to make it easier for our client to see the alterations. (and approve them!)

In drafting our documents, with today’s software (and a scanner if you have one), it’s easy to keep track to all of the provisions you have used in the past or you want to use (i.e.. Commercial Lease Law Insider). When you’re in a rush and you need to add provisions dealing with: completion of TI’s, property tax protection, renewal options, quiet enjoyment, maintenance responsibilities, etc. or with a sale: contingent items, deposit schedules, property condition, etc.... a quick highlight of the issues you need and a copy to your document can be done in a flash! resulting in..... more time to service accounts or prospect.

Updates - reports are the same. When inquires come to us, most contact or property database software (i.e.. ACT!, GoldMine, Access, REA, etc.) comes with or can easily be modified to include fields for us to keep track of inquiries about prospects we find for our listings. With a headset, so we’re “hands free”, we can drop into our Listing Activities Report: our listing, the date, action item, call back date, broker name, phone and fax, etc. by highlighting information already in our software. If our client calls....”I need an update on interest in our property for a meeting I have in half and hour....” and you fax it to him (through your PC) before he has a chance to make another call...the chances are great you’ll have an impressed client! It saves you time and provides the customer service beyond his expectations.

In managing this property or numerous sites for a national account, the ability to track lease expirations, rent escalations, notification dates, etc. now can be a simple a quick procedure. For many of us, in this era of “outsourcing” brokers can and should play a greater role in managing the real estate of corporations. With tools that are available to brokers today, even small real estate firms can professionally oversee a clients portfolio. 

If we think about it, the staggering amount of time we spend generating documents, when we could be be prospecting and negotiating (or taking time off) is incredible!

Research - the Internet will probably provide the greatest change in how we do our business in the future. Even today, online we can get financial information on our prospects (both credit as well as assets listed in their K-1’s), find out who receives contracts, who’s been purchased (or is a candidate), find key decision makers, tour the interior and exterior of our competition , advertise our listings and search the local MLS service for properties that compete with ours, etc. Today, with the advent of ISDN service, setting up a video conference will be routine. Though not typically used today, soon enough much of what we do will be far more automated and many services that brokers offer today can and will be done by landlords and sellers “in house”, which is why we need to provide...

VALUE

On the cover of the January ‘96 issue of Forbes, Warren Buffett’s curmudgeonly partner, Charlie Munger quotes... “Plumbers are useful, money managers aren’t”. The same can be said of stock brokers, lawyers and real estate agents if we don’t provide value. We can take advantage of all the high tech tools available to us, but if we don’t offer the client more than the role of the “finder” of prospects or reporter of inquires, with the technology available to our customers, more principals each year will do our work “in house.”

The landlord’s representative should be able to: 

Look at a prospect’s financial statement and with a quick glance, be able to identify if there are any obvious “red-flags” that would make them a likely high risk.

A few years ago, there was a highly successful broker (prospecting was his strength!) ..we’ll call him “Bill”, who was told by his client before the two of them went into a meeting with the CPA, contractor, lawyer and the prospective tenant “I’ll let you come into this meeting....the only thing I ask is that you don’t say a word!”. Value was not what “Bill” provided the client!

In a business climate that’s moving so fast, if we provide value to our clients, repeat business and referrals will supply all the business we will ever need.

THE LAW

In the SIOR “Strategies in Tenant Representation”, Bill Feldman provides an excellent overview of the issues brokers need to know as both a tenant and landlord representative. As agent for landlords (and sellers) the litigation boom has effected our industry like all others. A few suggestions...

Counsel - Recommend the landlord use an attorney for the transaction, specializing in commercial real estate. If your client wants recommendations, provide at least four. As we often end up drafting the language, if there is an error in it’s construction, the cost resulting from a poorly crafted paragraph can potentially fall on us....so pass the gavel to someone that does this stuff for a living!

Language - I may sound like it’s a “given”, but we need to know what the provisions in the document intend (i.e.. subordination, estoppel, indemnification, remedies, etc.) in order to make constructive recommendations to our client (during negotiations) and to their counsel (in preparation of the documents).

Compensation - get it in writing (by whom, to whom and when); if your state has lien rights (i.e.. Ohio),  great, if not, try to get it enacted. There is no need for real estate service providers to be unsecured third party creditors. (it’s no surprise that the largest lobby trying to defeat enactment of lien legislation circulating in my state, California, is the building industry!)

Agency - Indicate in your proposals that a subagency relationship does not exist between your firm and the cooperating brokerage house (you don’t want to be responsible for errors or omissions of the other agent). As well, clearly outline that your firm represents the landlord/seller only (if not a dual agency). Indicate that your landlord reserves the right to negotiate with other parties while he is in discussions with this prospect.

Disclaimers - Always include language that confirms the document is not binding and that only the fully executed document, delivered to each party, is binding. Have the landlord sign any proposal, even if by fax, before you co-sign and send it out.