I keep running into the same misconception from commercial real estate agents and big time landlords: they believe that working for/with a big firm will allow them to service their clients/tenants more sufficiently. Although there are benefits to working with a large CRE brand, there are also very glaring pitfalls.
While it may be true that mega firms with national and international exposure have an army of agents hungry for multi million dollar commissions, these same firms lack focus and direction for individual markets and cannot service smaller requirements with any sort of professionalism or diligence. Furthermore, in today’s technologically advanced world, listings (both on and off market) are available to well networked firms, big and small. This tech advancement also makes available market statistics to those with a need to find them. So if a small but well healed CRE firm in San Diego wants to find out about retail trends in Scottsdale, all they have to do is dig a bit online and conference with local Scottsdale agents in their sphere. Translation: you don’t need a big firm to find you deals in various markets. What you need is a well networked, educated agent who is honest and experienced in the type of transaction your looking to complete.
Without throwing some of my colleagues under the bus, here’s a recent example of this mistake being made by a very large, national, commercial landlord. In February of this year I put together a small, 1,100 SF industrial lease for a referral partner of mine who is a plumber (I would name the plumber here, but then you’d be able to look them up and see what park they’re located in – and I really don’t want to throw any of my colleagues under the bus). The park I placed this client in is a large industrial center in south Santa Ana. The units in the industrial center are small: most are around 1,500 SF, ranging up to about 5k SF. The property is owned by the aforementioned landlord and managed by a very respectable and professional management firm which is headquartered here in Orange County. The leasing agency, however, is one of the several very large, national CRE brands which we all know so well, who we’ll call BrandX. BrandX has had this listing for over a year. Upon obtaining the listing they placed very large signs on the prominent corner where the center is located. Huge signs. Obnoxiously large. The kind that block visibility of the buildings they are meant to draw attention towards. There are two listing agents working the availability and when I called on the listing, I could only get the junior agent who’s voice and tone suggested that he could care less. To compound matters, it sounded like I was talking to Spicoli from “Fast Times”. Very unprofessional to say the least. I toured the property, but in order to do so, you have to go into the onsite manager’s office to obtain keys – no lock boxes?? During negotiations, I still was only able to deal with Spicoli and he proved that this park was not high on his list of to-do’s. Near the end of February I had a health emergency which landed me in the hospital for three days….just as the lease was drawn. As a result I was unable to review the lease documents. I called Spicoli and explained that he would need to walk this file across the finish line. About a week after lease execution, I received a paniced called from my client saying that the management office was asking for more deposit monies – evidently they had made an error in the lease documents. I went back to review the lease and there was a glaring mistake on pg 2 of the lease. Do you know what that means? It means that Spicoli, who represents a very large CRE brand, didn’t even bother to review the lease, which I had expressly asked him to do. WOW! Thankfully, I was able to negotiate an equitable solution for both my client and the management team.
After all of this hullabaloo I went into the property manager’s office to discuss my displeasure with their leasing team and to offer my services. It was clear to me that this park needed a local agent to properly represent their availability; one who cares about his reputation and image. It was in that meeting that she confided in me that A) she had had many complaints from tenants and brokers regarding this listing duo, and B) she had heard that the landlord would be looking for a replacement soon. Good timing on my part right!?!?! Wrong. She explained that the landlord is the type of company that only hires large, name brand firms. She agreed with me though and it was clear that she was tired of dealing with BrandX and their obnoxiously large sign. She even offered to deal directly with me and pay me the entire commission on future deals. I gave her the letter I had written regarding my experience and my listing offer, and asked her to put it in front of whomever it needed to get in front of. I then went on LinkedIn and tried to find the decision makers at the landlord’s office. I even talked to a couple of colleagues about getting in front of this particular gentleman. To no avail. Eventually they made their choice and I was shocked at the decision.
After following up with the onsite manager for a few weeks, she was finally able to relay the landlord’s decision to me: they decided to double down on their dealings with BrandX. Instead of finding a new listing agent to service their Orange County parks, the landlord fired the respectable management firm and hired BrandX to lease and manage all of their Orange County parks. That’s right: Spicoli’s lack of interest, professionalism, and ability has been rewarded with even more responsibility.
If you’re wondering why a seemingly respectable CRE brand would treat an opportunity with such disregard, it’s because the individual deals are meaningless to them. First of all, the lease rates go as high as $1.10/SF gross at the industrial center I referenced; mostly around $.90/SF. Very few if any of the deals are over 3 years in length, and very few of the leases they execute are over 2k SF. Couple that with a split between the corporation and two listing agents and you get commissions around $500. How hard are you going to work for $500??? Especially when the team you’re working on is putting together multi-million dollar deals? Afterall this is a household CRE brand. They have offices and deals operating in all 50 states and internationally to boot. Why on earth would any of their agents give a damn about a commission on a lease that might make them $500 when the corporate brand they work for is dangling 7 and 8 figure, international deals in their face?????
Ridiculous. No wonder these large firms are starting to go with slogans like: Global Presence. Local Focus. It’s a PR trick, not to mention an oxy-moron. You can’t have local focus if you’re operating globally. Either you’re doing big deals all over the world, or your concentrating on local markets and doing what it takes to integrate yourself into the community. Take your pick. You can’t have both. You can think you can have both, but unfortunately you’ll only leave yourself open to honest brokerages who truly have local focus and community in their hearts. So go ahead. Expand globally. Give your agents the tease that they’ll be included on a $1B hotel development in France and let’s see just how hard they work to foster the type of relationships they’ll need to create in order to have that “local focus” part of their job description.