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| Image courtesy of Stuart Miles at FreeDigitalPhotos.net |
We have all been there.
A deal that seemed prime for the taking.
Your property was clearly the best fit for the client.
After all, the location was great, your pricing was
competitive and the tour seemed to go perfect.
You started talking seriously with the other side and were
told by representatives that a deal would be made.
Bingo!
Then, you hear back from the other party’s
representatives. Something changed and
your client opted for another property.
Hopefully, you did not hold the property or miss out on any
other potential prospects because you had a “live one.”
If you have been in commercial real estate for long enough
(or any business, for that matter), some variation of this scenario has
happened to you.
Our story goes something like this: (Note that the details
have been changed slightly to avoid divulging company names.)
AquaCompany does environmental
testing of the city’s water supply.
AquaCompany is a national company that has 350 locations. The local office has a small staff and needs
about 6,000 square feet of industrial space, with about 10% office.
AquaCompany enlists brokerage
company Brokers 4 Us to find a suitable office/warehouse space.
Brokers 4 Us contacts our office to
see if we have anything that will suit its clients specifications. We tell Brokers 4 Us that we have an as-built
space nearly identical to their client's requirements.
Brokers 4 Us sets up a time to view
the space with its client. The tour goes
very well. AquaCompany appears to like
the location and says the space works perfect for what their long term needs
are.
Our office meets with Brokers 4 Us
right after the tour to discuss a proposal.
We price the space competitively.
After all, this is a national company and we would be thrilled to
advertise AquaCompany as one of our tenants.
Brokers 4 Us tells us that there
are only 2 properties that AquaCompany is considering. The other location is a dilapidated building
that needs renovations and while it is in a retail area with high traffic
counts, AquaCompany does not need to market to the public, as they do
environmental testing for water.
Two weeks pass. We call Brokers 4 Us for an update.
We are told AquaCompany has not yet
made a final decision. There are still
only 2 properties (ours included) that AquaCompany is considering.
Our office asks Brokers 4 Us if we
should cut the price. This was during the
market crash and the space had been vacant for several months. We were thrilled to have the space occupied
by anyone, especially a national credit tenant.
“No need,” we are told by Brokers 4
Us. The other property’s landlord has
refused to pay any sort of commission to Brokers 4 Us. AquaCompany must pay the brokerage fees,
making the monthly rental rate significantly higher than what our company was
quoting. “Just sit back and wait for
them to make a decision,” Brokers 4 Us says.
Another week passes with no phone
call.
Again, we reach out to Brokers 4
Us. AquaCompany went with the other
property. “It makes no sense!” Brokers 4
Us tells us. The rent is a good 20%
higher with the other property, the building is in bad shape and they have to
fight retail traffic for a business that has zero walk-in traffic.
All signs pointed to yes, but the answer was still no.
You can never bank on something until it is signed on the
dotted line. Thankfully, we did not pass
up on any prospects. As a general rule,
we never take a space off the market unless a letter of intent is signed.
Remember, it’s just
business and anything can happen.
Please feel free to leave comments. We promise to read them all. You can also email us with any
questions/comments at leasing@seawaybusinesspark.com. As a reminder, we provide office space for
rent and office/warehouse space for rent in Gulfport, Mississippi. For more information, visit our website at www.seawaybusinesspark.com or call
us at (228) 575-7731.
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