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Lease Strategies

Product Overview

This LARG contains the following items:

Keeping the Mature Office Complex Fully Leased With the Master Leasing Agreement, and the Lease Clause Critique: Extended Excerpts from the Pro-Owner Master Leasing Agreement.

Number of Single Spaced Pages: 12





This LARG looks at non-exclusive agency marketing agreements--brokerage agreements that make it possible for a property owner to work with several brokers in the same market simultaneously to lease space. The first article discusses why such agreements may make sense for owners of mature properties. The Lease Clause Critique contains extensive excerpts from a pro-owner master leasing agreement designed to document an owner's non-exclusive marketing arrangements with the local brokerage community.

Keeping the Mature Office Complex Fully Leased With the Master Leasing Agreement

Let's say that you are the owner of a mature but prestigious office complex which has been occupied by tenants for several years. You have your own leasing office in the complex which also provides property management services, and which takes care of existing tenants in the complex.

You prefer to handle all leasing matters with existing tenants in the complex directly through your leasing office. Why pay a commission for renewals and expansions of existing tenants when you already have an established relationship?

Defections and Downsizing

But what about new tenants? It seems like you need a constant supply of them to keep occupancy levels where they need to be. That's due to the high rate of tenant defections to other newer properties. And the downsizings and consolidation efforts of the major corporations--your bread and butter tenants of days gone by--are a serious threat to acceptable occupancy levels. A stream of new tenants is critical to profitability.

You've got a sign on the complex with the phone number of your on-site office. That produces some new tenants who choose to contact you directly. But most new tenants use brokers, so that they can get the kind of economic data needed to compare the net effective rentals of competing properties in your market area. That means good broker relations are a key factor in attracting new tenants. But what sort of contractual arrangement with outside brokers makes sense?

Exclusive or Non-Exclusive Marketing?

Of course you could always sign an exclusive listing agreement for the property, and let one brokerage house take care of all marketing duties. But why do that? Why not take care of your existing tenants yourself, and make several non-exclusive deals with brokers that you know with good track records to come up with new tenants?

Many office brokers in the market know you personally, as well as the kind of space available in your complex. If a broker brings you a deal that makes economic sense, you will certainly pay him or her a commission if the deal is signed. The problem is that all of the details on the commission have to be negotiated separately with the broker while you negotiate the lease with the tenant. Isn't there a way to take care of all the details inherent in leasing agreements if you use several brokers on a regular basis?


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