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How to Successfully Navigate a Hot Market – Part 1: Tenant Edition

David Eseke • 4/21/2021

In speaking with many of our clients over the years, most have a common ask along the lines of, “Get me a good deal.” That phrase typically means they are wary of paying more than necessary in order to purchase property or secure a lease. Yet in the historic rise of the Dallas/Fort Worth industrial market, getting a “good deal” should probably be rephrased as “get me a building/space.”

While we are hard negotiators on behalf of our clients, we currently spend most of our time just trying to get our clients in front of properties and/or spaces. With so much competition for space simply securing a property is a huge win. A major institutional landlord recently told me, “If someone (a tenant) tells you they are rate-sensitive, they probably shouldn’t waste their time in this market."

Whether you are in the middle of an active search, or contemplating one in the next few years, below are some tips on how to successfully navigate a hot industrial real estate market as a tenant so that you’re not on the outside looking in.

  • Take the time to fully understand your space needs and requirements. Know which things are critical and which things you could live without.
  • Educate yourself on current market rates/pricing so you can understand costs.
  • Avoid the temptation to engage multiple brokers to assist you with your search. While it might feel good to have several firms looking for your ideal property, understanding motivation and having total alignment are critical. Since brokers are paid on a contingent basis if a transaction occurs, engaging several brokers can have a negative impact on motivation and trust. We recommend interviewing several groups before selecting one that best understands your needs.
  • If you are planning to tour a property (or properties), be prepared to negotiate immediately. There’s value in exploratory tours but expecting a space to be available two or more weeks after touring could let you down.
  • Unless you work for a publicly traded company, you should have current and historical financials readily available. Landlords will often compare the financial strength of tenants when deciding between multiple groups. Also, be sure that the financials match the entity signing the lease.
  • Verify the bandwidth of your attorney or in-house counsel so they can be prepared to review the lease agreement or purchase contract immediately. We’ve helped our clients move ahead of other groups by moving through the legal documents quickly.
  • If you’re looking to occupy the space immediately, be sure to understand the landlord’s insurance requirements so that you can provide an updated Certificate of Insurance right away. Even with a signed lease and rent checks in hand, landlords will not provide access without proper insurance documentation.

Check back soon for Part 2 when we explore tips for owners and landlords.

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