In a world of rapidly changing technology at our fingertips, in all industries, commercial real estate is no different.
From listing platforms of available space to up-to-the-minute availability of industry related information, cutting-edge technology is meant to improve our efficiency, accuracy and expertise. And in so many ways, it does.
So people are often surprised by my answer when I’m asked for my No. 1 tip in the world of commercial real estate: Always put your faith in the human touch, above all else.
People on the Move
When it comes to a company’s top two expenses, the answer is most often the people and the real estate — personnel and office space. This being the case, decisions with regard to a firm’s commercial real estate needs are not to be taken lightly.
When it comes to office space, there is a ton to understand about not only what tenants actually are paying for, but what certain responsibilities are under the leases that top executives are signing. There is a lot at stake. This is why the professionals tenants’ align themselves with — commercial real estate brokers and attorneys — will be the most important decisions made in the process.
For example, listing platforms are getting more sophisticated by the day. But while information within a system may say a certain property has a 25 percent loss factor (the percentage of common space unavailable for tenant use, such as elevator banks, electrical closets, etc.), in certain instances this may not actually be the case. In markets like New York City, there is more room with what is acceptable in terms of loss factors, so it is really difficult sometimes to understand whether a building’s stated “25 percent loss factor” is really 25, or more like 30. Or even 35.
Why is something like this a big deal? Because when it comes to how a company is run, it is all about the bottom line. Not only is that 5 or 10 percent difference going to translate into a lot more dollars being spent on ‘unusable’ space, it will mean the company also miscalculated the efficiency of how their operation can maximize the space.
This is where having a well-trained, experienced professionals can make a huge difference. The right broker will know the history of the building; they will know what the true loss factor of the property is as opposed to the one being marketed. They also will know the personality of the ownership and understand the nuances of the leases — as will the right attorney — which can never be underestimated when it comes to negotiations.
Both are things all the technology in the world can never replace.
Adam Gittlin is a private investment executive with extensive experience in commercial real estate throughout Florida and New York. He is the author of the Jonah Gray series: “The Deal,” “The Deal: About Face,” and “Deal Master.” He can be reached at firstname.lastname@example.org.