Commissions are paid to the Broker who then pays the agent responsible for the lease. Agents typically work on "splits" with the house. In some cases, a tenant will retain an agent to find a commercial space to let on the tenant's behalf. Most listing agreements require that the listing agent split the commission earned with the tenant's representative. In most cases, including in Houston commercial real estate, commissions are split 50/50. There are exceptions to this rule. In soft markets where vacancy rates are high and tenants are at a premium, the owner of commercial property may pay the tenant's representative a full commission. In this case, the listing agent usually continues to receive a half commission, which results in a commission and a half being paid out by the owner.
The leasing agent has the listing on the commercial buildings for lease and represents the interests of the building owner or landlord. A tenant representative or "rep" represents the interest of the tenant in a commercial real estate lease transaction. Some Houston commercial realtors work exclusively on listings, others will take on tenant representation engagements only, while some will work on both.
In some cases, an owner will lease commercial properties in Houston on their own. Sometimes, the owner will employ a commercial realtor. Typically, the owner will pay a full commission to any broker who brings a tenant to the property. An in-house leasing agent is usually paid on a salary basis, so their incentive to enter into a lease is different from a commercial listing agent who is paid a commission.
A tenant broker is like any other service professional. You should expect them to represent your interests, to give you good advice and to help you through the first phase of the office leasing process; that is helping you determine how much space you need, what are your most important selection criteria, and then finding and negotiating for the space that best meets your needs. They can also provide you with sound analysis of Houston commercial real estate market conditions and keep you up to date on the latest office, retail, or industrial leasing trends.
In commercial office and retail space leasing, a Tenant Broker service is free; their fee is paid by the landlord and it doesn't cost you, the tenant, anything. Consider the four most common type of leasing scenarios:
In general, try to model out your Houston office space need based on the number of employees you plan on hiring over the course of the lease you’re about to sign and the amount of storage and file space required. Note that while your home lease may typically be a one-year lease, commercial real estate in Houston often requires a 2-3 year lease to get a competitive rate. Given the length of these leases, getting involved with an office space can be a very risky endeavor — a long commitment for anyone starting a company. Hiring a Tenant Broker is the best way to ensure you're getting the best bang for your buck when searching for commercial property in Houston for rent.
Typically, when dealing with commercial leases for space a gross, single net, double net, triple net, or percentage lease is used.
Written By: a Houston based associate of an international law firm representing clients in a broad range of developments, financings, dispositions and acquisitions of a variety of commercial projects, including the sale, acquisition, leasing, financing and development of mixed-use, office, retail, industrial and energy facilities.
As usual (we don't have fun lives...), I was looking through all the Houston commercial space options. This time, I was trying to find the best way to find a tenant broker in Houston. In turns out this is as difficult as finding commercial space.
After discussing our vision with someone who has had a painful experience looking for commercial space in Houston, the apt analogy was -
At TheSquareFoot, we have been discussing our launch with many members of the commercial real estate agentcommunity. Most importantly, since our first product will be geared towards commercial real estate industry in Houston, their feedback is of paramount importance. You should already know based on our posts, we believe the smartest way for a tenant to find space is to use qualified commercial real estate brokers in Houston.
Written by: Ben Debayle, a tenant rep broker with The Finial Group specializing in greater Houston.
After reading, Where Real Estate Listings Fail, we thought we would address how this translates to the search for office space listings online. You would think looking for commercial real estate to lease in Houston would be easy in this technology driven age (I mean I can find the best chinese food within a mile on my iPhone in seconds). This is not for lack of trying... there are hundreds of websites dedicated to listing properties, which include many attributes, including photos, descriptions, and prices. What consumers do not know is that online listings can be dangerous and counter-productive for a few reasons.
Building Class for commercial real estate in Houston refers to the quality of property. Class A office buildings are Generally 100,000 sq. ft. or larger (five or more floors), concrete and steel construction, built after 1980, business/support amenities, and well located with great traffic access. These properties are usually very well-managed with on site support day in and day out. Class B buildings are typically renovated and in good locations. Newer buildings are smaller in size, could be wood frame construction, and/or in non-prime location. They still have high quality management and tenants. Class C buildings refer to older, un-renovated and of any size in average to fair condition. Building infrastructure and technology is outdated. You'll often notice older/slower elevators, low ceilings, smaller bathrooms not in pristine condition, and poor parking conditions when touring a C class building.
In an effort to begin to understand the process and where the different people fit within the commercial leasing process, we are going to start a weekly series, The Players.
In Houston and throughout Texas, one of the best franchises around is Texadelphia. The cheesesteaks and queso are ridiculous and the space the franchisee chooses usually fits in with the community and is a great place to grab a bite (see Rice Village, Westheimer, or Cy-Fair).
While talking to businesses all over the city about finding office, retail, or warehouse space for their company, a question that regularly pops up is whether or not the services of Houston commercial real estate brokers are needed when negotiating lease renewals. The short answer is ABSOLUTELY!
You can try…but why? How many leases have you signed recently? Do you know the market rent for commercial space in each individual neighborhood or building in Houston? How large of a tenant improvement build-out package should you ask for? How about some free rent? Is this landlord known as being easy to work with or will he find clauses to squeeze you on in 6 months because he is having financial trouble?
Congrats, if you made it this far you are on the right path to finding the perfect space. As you may have heard, when searching and finding the right space you can expect to frustrated and baffled at times. Commercial Real Estate is a massive industry with lots of jargon that involves everything from buying land, to developing buildings, to leasing them, to selling them. In addition, its an old-school business, which has yet to adopt technology and which benefits from protecting information and uneducated consumers. For starters, the word commercial real estate is used interchangeably in all four aspects described above, but our goal is limited to helping consumers lease (some people use term "rent") space for their business.
When visiting with small business owners about how their company’s office space plays a role in the business growth and culture, there’s typically a common theme that rears it’s ugly head: too many mistakes are made in the leasing process. Owners and decision makers often make several key mistakes that can end up costing companies significantly down the line and can even cripple their growth rate. Because office rent is the second highest expense the vast majority of companies incur, doing things the wrong way leading up to signing on the dotted line can be devastating and can make any business owner go crazy!
Well now it's official. You've known it was coming for years, but you weren't sure who exactly would be looking and through what vehicles the search would be carried out in. Commercial Real Estate is a funny business. For an industry so lucrative with billions of dollars switching hands every year, it seems to be very slow to adapt to change and technology. Most experts (real estate professionals who understand digital marketing and the technology behind online advertising) say that the residential side of real estate adopts changes in technology faster than the commercial side, and is about 3-8 years ahead of commercial when it comes to adopting technology and using it to increase productivity and source prospects.
The latter six months of 2012 will provide greater opportunities for commercial real estate investors and property owners to profit from increasing demand and rising rents. However, for businesses seeking office space for rent in top metropolitan markets like New York and Dallas, it may be wise to begin considering options now, before vacancies become too tight.
Space is very valuable to a business and every square foot of space can be utilized in some way. Sometimes, when moving into a new office, you realize that some of your items fail to fit in your preconceived layout, or maybe you are starting to realize that your inventory and equipment takes more space in your office. One of your options could be to cram everything in your office space, possibly causing a cluttered mess. Another possible option is to find storage. With those two options open to you, when does it make more sense to rent a storage unit instead of leasing more commercial space?
The costs of starting a new business fall into two primary categories - one-time launch-related commitments (office equipment, consulting services) and ongoing expenses (office space lease payments, salaries, insurance). With cash flow a constant concern for Houston businesses, one strategy for boosting their financial capital is shifting up-front launch expenses to monthly costs, which is why some businesses may opt to lease office equipment or enter a short term lease with one of the many Houston executive suites.
The magic number that business owners should keep in mind when planning a Houston office move is six - as in, the number of months it should take from the time a search begins until the doors to a new office are opened.
Moving to new Houston office space is an exciting time for any business, as it represents a company's continued financial stability. Of course, the move itself requires strategic planning and careful execution, particularly when it comes to relocating information technology (IT) equipment and networks.