7 reasons why you should use a Property Advisor

Get the best possible commercial property deal

7 reasons why you should use a property advisor

7 reasons why you should use a Property Advisor

Why Use a Property Advisor?

New Zealand is a nation of DIYers with a number 8 wire mentality.  If something goes wrong, Kiwis generally look for a way to fix things themselves rather than pay for expert advice.

So why should you use a Property Advisor?

The short answer?  To get the best possible commercial property deal for your lease or purchase transaction.

Assuming you are not operating a property business and negotiating property transactions on a daily basis, doesn’t it make sense to use an experienced and professional property advisor when negotiating a commercial property transaction, which is likely to be your second largest cost item behind staffing costs? 

What’s more, a commercial landlord or vendor will likely have a real estate agent or in-house leasing manager acting on their behalf to maximise returns. If you want to level the playing field, having a property advisor represent you and your business is the smart choice.

 

An example of a Property Advisor in action

To illustrate my point, I would like to run you through a typical client leasing engagement.

Our client approached us to negotiate a lease on an 850sm office premises they were interested in.

As we discussed their business and operations to gain a better understanding of their space requirements, it became apparent to both parties that they had over-scoped their space requirements.

Space Savings:

850 sm  vs  700 sm         

18% space savings

Getting the space component right is critical. Too much space or too little space can be an expensive problem

The next step was to discuss the proposed rent and opex cost of the office premises. 

With our market research and critical insights, we were able to benchmark the proposed rental and opex offered by the landlord’s agent against our market benchmarks to negotiate a more competitive offer for our client.

Cost Savings:

$475 psm  vs  $400 psm

16% cost savings

Knowing what is market rental and what opex costs will impact the deal combined with our negotiating expertise enables us to get you the best possible deal

Based on our market intelligence and our ability to create market tension, we were also able to successfully negotiate lease incentives in the form of fitout contributions and rent-free periods. 

The additional benefit of the fitout contribution is that the landlord owned the fitout which meant that our client will save at the end of the lease term by not having to pay to remove the fitout used during the lease term.

Incentive Savings:

Fitout Contribution: $300,000

Rent Free Savings: $  75,000

Defit Savings:          $ 50,000

$.425m gained

Knowing what to ask for and how to maintain competitive market tension as well as working through the lease terms to save costs and derisk the lease transaction resulted in further savings.

While the above example highlights the financial savings, there are also the non-financial benefits that can be added to the above example such as negotiating waivers or limitations on personal guarantees to consider.

What can a Property Advisor bring to the table to level the playing field in your favour?

  1. Independent and Transparent Advocacy – A property advisor who is paid by you works for your benefit. Real estate agents who receive a commission work for the landlord’s benefit.  Tenant representation agents who work for you, but share in the landlord’s commission, in our opinion, have the potential to be compromised.
  1. Market Research and Intelligence – These insights can influence your decision-making and give you valuable bargaining power.
  1. Knowledge – A property advisor knows how to dive into the details of an agreement. They can quickly identify what you do and do not need, and what you should negotiate in or out of the offer. As with most things the devil is in the details! This sentiment is true of any commercial property transaction. You must understand what the details mean for your business if you are to negotiate the best deal. 
  1. Experience – A property advisor is well-versed in finding premises and negotiating terms.
  1. Focus – Often a time-consuming exercise, tasking an expert with the job gives focus to the task and frees you up to do what you do best. Run your business. Every minute spent away from the helm of your business, costs you time and money.
  1. Deal Structuring – A property advisor can structure a lease or purchase deal that benefits your business and sets you up for future success. 
  1. Negotiating Expertise – A property advisor is an experienced negotiator who can apply strategy (e.g. what to ask for) and tactics (e.g. market tension) to achieve the best possible commercial property deal.

If you are looking to get the best possible deal on your next commercial property transaction and don’t want to leave money on the table, we recommend you enlist the services of a property advisor. 

The savings you achieve on your deal will far outweigh the fees of the Property Advisor.

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