Office Leasing Confidential
Most sales professionals and brokers will recognize this photo. That’s a young Alec Baldwin, in David Mamet’s “Glengarry Glen Ross”. He’s from downtown, and he’s richer than you…The scene depicted above contains one of the all-time monologues in cinematic history, and a handful of superb one-liners. As you read, a sales manager is showing this to one of their staff, hoping to inspire them. I knew my career as a commercial real estate broker would be different, that I’d be the opposite of the characters created by Mamet. What I didn’t know, was how well this film would expose what is in the hearts of many larger brokerage shops, and some seasoned brokers. “Glengarry Glenn Ross,” is not analogous to reality because of its portrayal of the desperate and dishonest salesperson, down on their luck and drinking heavily; but for the way it embodies the modus operandi of some of the CRE industry’s most productive professionals. To quote Alec Baldwin’s character, Blake:
“Only one thing counts in this life, get them to sign on the line that is dotted!”
Don’t get me wrong, there are many ethical, responsible, and scrupulous advocates in the brokerage community here in San Francisco; I work for one! There are those who actually abide by their obligation to their clients as a fiduciary. But for every one of those, there is one who will “lay down” to close a deal; to get on to the next one. Churn and burn. Get both parties in a room and let them reach an agreement. Broker the deal, don’t get in the way. “A.B.C.; A, Always; B, Be; C, Closing.” — Blake (Alec Baldwin).
Maybe I’m naïve, but isn’t the point of representing someone’s interests in a negotiation to fiercely argue every point in their favor, with the goal of obtaining the most favorable terms? Shouldn’t it be a grind? Shouldn’t decisions be made carefully with regular input from seasoned professionals (i.e. Architects, General Contractors, Furniture Consultants, Real Estate Counsel)? Unfortunately, brokers are not incentivized to behave this way. Big commissions and sales culture demand deals be quick and easy. Get on to the next one. Always be closing! In an incredibly tight market, like the one we’re currently experiencing, this type of brokerage can be disastrous to a business (See “Death by Office Lease: How to Avoid It”). For many of us, real estate represents the second biggest line-item expense for our business’. Can you afford to be poorly represented?
It seems like every week we read about a new +50,000 sqft. lease being signed, and every month another huge block of sublease space comes online from a company that just, “signed on the line that is dotted.” They took on more space than they could afford, and are subsequently dumping the excess room at a discount. This is a demand driven market (See “Tenant Demand: Steady (Well, Sort of….)”), and opportunistic brokers are having a field day with tenants, sans regard for long-term profitability. Tenant rep brokers act like salesman who work for sales organizations, selling space to their clients instead of providing the advisory service of a conservative business partner.
One thing is clear, the market is out-of-whack…And brokers who are not advocating voraciously for their client’s interests are part of the problem. There is a conflict when tenants work with a broker whose organization’s main objective is to drive up rental rates. There is too much at stake in an office lease to entwine yourself in this type of conflict. How valuable is your deal? How many other clients is your broker representing with similar spatial needs? Which buildings do they represent? Who is their boss, and where do her/his allegiances lie? What about their firm’s shareholders? Ask these questions from your prospective representatives, before you sign on the line…