6 Common Misbeliefs People have about Commercial Real Estate

For the past several years, real estate industry seems to have been influenced heavily by the real estate agents, brokers, property managers, owners, and also the economists, academicians and appraisers whose main mission is to promote the interests of their members. It seems like the outsiders just look at the properties from outside and come to their own conclusions without understanding the facts.

Nobody is an expert in all the fields; when we do not have proper knowledge about something, it’s always good to get in contact with those who possess good understanding about the field before just coming to a conclusion blindly. Here are such common misbeliefs people have about commercial real estate.

1. 50,000 Sq. Ft. available – you have to lease entire space

This is the most common misconception the people have about commercial real estate. Unlike residential real estate, it’s not that you have to take the entire available space for lease or rent; the deal can often be flexible. It’s always up to the landlord or the building owner to decide if he wants to divide the space.

If you just want a space of about 10,000 sq. ft. for your business, the landlord may agree to divide the space into smaller suites. However, there is a cost associated with the modifications they need to do to divide the space for you.

2. Lessening the head count is like wasting the space

This seems apt for the start-ups; when they are facing tough times with the economic conditions of the company, they will have to think about cost cutting by lessening the headcount of the company.

What most of the companies think is that, removing the employees would just leave a few cubicles empty in their office space, but that’s not the case. They always have an option called sub-lease, where a little space in their office can be leased to some other tenants who are looking out for a shared workspace. This way, you don’t have to pay for the space which you aren’t using.

3. Agents with more properties are the best

Of course, you can consider the property list as one of the aspects to decide it to be the best, but that shouldn’t be the only criteria.

Most of the tenants just think that an agent is best just by looking at the property list offered. That will not be the case always; probably the listing is still there just because of its high price or maybe it’s not worth purchasing. Also, there are some agents who are great in getting the property list, but when it comes to transaction, they won’t be having necessary skills to close the deal.

4. Top companies are always the best

Are they? No, not always! You may have come across the top most real estate companies in the market, but the question is, will you get the required attention when you go with the top companies?

As they will be handling several projects at a time, they might not be able to focus completely on your needs. They may come up with the ones that don’t fit with your requirements. So, don’t just go with the numbers, try finding the one who can understand your needs properly and provide you the best.

5. Rent is fixed for your contract term

It’s true for most of the contract terms, but there is something called blend-and-extend lease policy where the tenants are allowed to renew the agreement before the term gets over; this is generally done in order to lower the current rents and additional capital improvements.

Blend-and-extend lease is typically a win for both the owners and tenants where the tenants can achieve a favourable rental rates and other benefits, meanwhile the owners can keep you as their tenant for few more years without having to search for others.

6. Single agent can fairly represent both parties

Outsiders who don’t know the basics of real estate business may think that they are in the safe hands when they actually are in the wrong hands. They think that their agent is going to help them in negotiations and other processes being in their favour.

The real estate industry sees it differently and allows single agent to represent both the parties. In such cases, it’s probably the owner who avails the benefits and receives the highest possible amount.

Both the buyers and tenants legally have the right to hold the real estate agents who claim to have the expertise in the area of specialization. You just have to be very careful while selecting your advisor; you need to make sure that they have significant experience to solve your problems. Just don’t make blindfolded decisions. Take advices and tips from those who are knowledgeable in the field before making your move.

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