By Steve Schwegman
Senior Vice President
Jones Lang LaSalle
One of the most critical decisions facing an owner of industrial real estate is choosing a broker to market a vacant building for sale or lease. After all, driving the highest value in the shortest time is imperative to the return on investment. Carefully selecting the right broker will directly impact your bottom line.
Most owners will likely want to interview more than one broker in order to find the right fit. So where to begin? A good place to start is asking other building owners for firm recommendations. Have they recently sold/leased a building? Which broker did they engage and did they have a good/bad experience? Also check with the City or County economic development organizations for referrals.
Once you have a handful of firms to consider, it’s time to start the interview process. Here are some things to look for:
- Experience. Obviously this probably won’t be your broker’s first project, but does he/she have relevant experience? In other words, has the broker handled similar transactions within the same market/submarket as your property? You want the best broker for the assignment. The broker selling multi-million dollar portfolios is not going to be the best fit for a 50,000 SF vacant building sale and vice versa. Solid, relevant experience will usually translate into several useful buyer/ tenant relationships as well.
- Market Knowledge. Some owners’ sole purpose in hiring a broker is to “find deals”. However, what you should really be looking for is a broker that will find the right deals at optimal terms. Market knowledge is the most powerful leverage tool utilized during negotiations. Does your broker have a deep understanding of recent leases and sales? Does the broker know market trends that could impact future deal terms? Does the brokerage firm have a dedicated research department? These factors will create significant value once a prospective tenant/buyer is identified.
- Occupier/Investor Balance. It is important that the firm you hire has a healthy balance of landlord/seller and tenant/buyer representation. This gives the firm a well-rounded expertise and an appreciation for other brokers he/she will ultimately deal with on this assignment. A good client balance will also add to the market knowledge and expanded relationships.
- Reach. Think about the likely candidates to purchase or lease your asset. Will the prospects be local, national, or international? How capable is the firm in reaching those prospects? Size and scalability of the firm is important as is the “outside” networks the individual and firm are involved in (e.g., local EDC relationships, national supply chain organizations, international real estate forums, etc.).
- Technology. Digital marketing has become extremely important. Online tools are the primary means used by brokers, site selection consultants and even the occupiers themselves. Is the firm subscribed to online marketing resources such as CoStar and LoopNet? Some markets have local multiple-listing services used by brokers. Make sure your broker is casting a wide net and using the latest in digital marketing to set your asset apart from the competition.
- Good Communication. Silence is deafening for an owner of a vacant building. How does your broker communicate with their clients regarding prospects, market activity, existing and future competition, etc.? Ask to see examples of prospect reports sent to other clients for similar assets. Make sure to set up reasonable expectations for regular and consistent reporting.
- “Gut Feel”. At the end of the day if you have a “gut” instinct, it’s probably correct. There needs to be a strong mutual trust between you and your broker from the beginning to the end of the project. Also, if you find the broker likeable, chances are that prospective tenants/buyers and their brokers will think so too.
These are just a few of the important factors to consider. If the size of the project dictates it, you may consider developing a formal “Request for Proposal” for marketing services.
For examples or templates, please feel free to contact us.