To Quote or Not to Quote Office Rents
With a healthy supply of office space in the L.A. market, tenant brokers say that landlord reps should abandon the no-quote strategy on marketing materials.
When marketing an office space, should brokers quote or not quote the expected rent? With the healthy supply of office options in the Los Angeles market, tenant rep broker Michael Arnold of NAI Capital says that leasing brokers should abandon the no-quote strategy. He says that not quoting a rent could actually hinder the leasing activity on a space because tenant brokers won’t call to check the rent.
“Landlords are not quoting rates, and I think that the impetus behind that is that brokers think that people are going to call them to find out the rate and they will get interest in it,” Arnold, EVP and director of the tenant consulting group at NAI Capital, tells GlobeSt.com. “To me, it makes no sense not to quote the rent that you are going to try to achieve. I don’t have time to get the rents of every single opportunity, and if you don’t want to quote them, you are probably not going to want to put a really economic deal together. I have an idea of a budget that I am dealing with for my client, and if I can’t get the rate, then I am spinning my wheels. I have never been an advocate of it.”
Arnold adds that most brokers working in the office market know the pricing in a particular reason. He says that this is another reason why office rents should be listed in marketing materials. “Everyone knows where the market is at when you do the deal,” he says. “Very rarely is a broker ever going to be able to do a deal that is 50% below market. The reality is that you are going to do a fair market deal.”
In fact, this practice is why tenant representation has become so important, according to Arnold. Tenant brokers understand the market and the pricing, and can guide clients to a good deal. “Understanding what the market calls for and finding the right opportunity is where tenant consultants or advocates really have their value,” he says. “The brokers that come in and say that they are going to do amazing deals is all smoke and mirrors. The reality is that the market is going to be the market. You need to understand the landlord incentives and motivations.”