On your side: tenant reps strive to even the playing field.

• Author: Kaelble, Steve
• Position: Commercial Real Estate

Most people wouldn't go to court without an attorney. Many wouldn't buy a home without consulting a real-estate agent.

But a lot of businesses walk into the landlord's office and sign a lease without having anyone on their side. That's changing, however. Major commercial agencies in recent years have added tenant-representation services, and there even are firms created solely to represent tenants. These specialists say the increasingly complex business of commercial real estate has made tenant representation essential.

"We believe businesses need someone helping them make real-estate decisions as much as owners need someone to help them sell," says Tom Abernethy, a partner with Indianapolis-based Summit Realty Group, a firm that specializes in tenant representation. In any lease deal, there's likely to be a real-estate agent involved, he says, "but that person is representing the landlord. Our goal is to let the tenants have the same expertise."

"Tenant representation is a function of the '80s, when there were a lot of buildings being built and major concessions being offered to tenants," says Sam Smith, a tenant-representation specialist with CB Commercial in Indianapolis. "It became important for companies to understand what these concessions were and how to maximize them."

While concessions make good deals possible, they set up all kinds of apples-and-oranges situations that make it hard to compare the value of various different lease deals. One owner may offer free build-out, while another may offer free rent. A third may simply cut the lease rate. An owner may or may not include utilities. Building amenities may vary considerably. Such variables make shopping around more and more difficult.

In addition, Smith says, a tenant may not be as familiar with the overall condition of the real-estate market as a tenant rep is. "Say you're paying $16 a square foot and they offer it to you for $15 on renewal. Would you take it, or should you go for $13 or $12?"

"There may be huge discrepancies, even within the same building, in rates and terms," says Peter Quinn, another Summit partner. A tenant rep has expertise in gathering this kind of intelligence, which can be crucial to hammering out the best possible deal. Depending on the size of the space and length of the lease, a tenant rep has the potential to save the client thousands upon thousands of dollars.

The search for the right rental property should begin...