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June 3, 2019
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3 non-obvious facts about the commercial real estate market. Get to know them before you rent



The commercial real estate market is quite a specific segment of the market. Its secrets are known to a narrow group of people – mostly owners, leasing building managers and employees of agency offices. A tenant who is just gaining experience should be aware of several issues.

You can go to meetings that are pointless from the beginning

Many people who are looking for an office, warehouse or any other commercial space, are convinced that thanks to the help of real estate agencies, they prevail over time. Unfortunately, this is often a mistaken belief. In fact, an agent may not know or not have an access to a building that would meet the needs of the tenant. Instead, the broker will show him other premises in the hope that the tenant will be tempted by his offer, which, although not the best, contains advantages that will convince him to sign a contract. A common practice in this profession is to show the client (tenant) around the objects that the agent knows, that are the easiest to rent, and from which the commission is the largest. Before the agent can show the tenant the appropriate premises, he can “nail” him in those buildings for which the agency has exclusivity or in which he would like the contract to be signed. And who knows, maybe it will work? More often, however, it turns out that the tenant is going to meetings that are pointless from the very beginning and waste his valuable time.

A lower commission may mean lower rent or financial contributions

On the commercial real estate market, it is assumed that the tenant does not pay the broker’s commission fee – this cost is covered by the owner of the premises. However, this does not mean that the tenant should not seek to lower the commission. If the commission was lower, the landlord could lower the rent or propose an additional no-rent period or other incentive for the start. When the broker’s commission fee costs him dearly, he usually wants to deduct some of the costs in rent, and this happens to the detriment of the tenant, who has to, in fact, pay the broker’s commission fee – but included in the rent instead. Imagine that the commission cost is 1% of the contract value, instead of the standard 5 or 10%. No broker works on a 1% commission, but it is possible when using new technologies to match the tenant and the landlord that the Realko24 platform brings. In addition, it speaks transparently about the commission, which in this case is the same for every landlord. In such a situation, even tens of thousands of euros stay in the landlord’s pocket, and thus, he can offer a lower rent or financial contributions. For instance, he may equip the office with better equipment, replace the furniture or provide constant access to fresh fruit and a coffee machine (capsules are free of charge).

Transactions without brokers in the commercial real estate market are still rare

Direct rental of a flat is both normal and common situation. But offices? Warehouses? An entire floor in a glass building? It has been assumed that we only carry out such transactions with a broker’s assistance. There are no direct meetings. In this respect, the commercial real estate market is quite fossilised. We have Airbnb and Booking on the tourist market. We have Uber on the transport market. Also, the housing market consists of innumerable applications for finding offers and arranging meetings. The commercial real estate market had to wait a long time for a similar solution – and it is Realko24. Today, the transactions in which a broker is involved are still the norm. It is worth noting, however, that the online platform provides what brokers have dealt with so far, that is, matching tenants and landlords with each other. What is more, the commission on such transactions is only 1%. So, this simple solution brings the saving of not only time, but also money. The winner is both the tenant and the landlord. One can risk the claim that it is only a matter of time before transactions without brokers in the commercial real estate market will become a new norm.

Source: Realko24