Advisor relationship benefits brokers and clients.

In the 1980s, it all came down to gun slinging. Office buildings in the tri-state region were being built at an incredible pace. And brokers looking to capitalize on the boom would throw proposal after proposal at tenants. The ones who brought the biggest free rent packages and tenant work letters almost always won the business. Volume became the brokers' biggest selling point--the number of deals done became a badge of honor and the key to impressing clients.

Flash forward 20 years. The wild west of commercial real estate no longer exists. Today, clients look for brokers who can provide a far more sophisticated skill set than in the past--and those who can become trusted, long-term partners. This benefits both sides exponentially.

The bottom line for businesses is that real estate has become a top priority at the c-suite level. In terms of overall operating costs, real estate today represents some 8 to 15% of a company's annual expenditure. Any savings in this area goes right to the bottom line. Additionally, the cost to move has risen significantly across the board. Rents are higher in new buildings. Construction costs have risen 30 to 40% over the past decade. Equipment has become more expensive, and furniture can be purchased new, refurbished or used. In other words, the stakes are higher and decisions more complicated than ever before.

The most successful brokers are helping their clients analyze all variables in the real estate process to help them achieve the most forward-thinking, cost-effective solutions. Unlike the one-off transaction of the past, this means more than saving money on the rent.

Rather, brokers are negotiating state incentive packages. They are bringing to the table teams of architects, attorneys, general contractors, furniture vendors, telephone consultants, moving companies and relocation specialists. The broker of today is like a quarterback or project director. He or she is intricately involved in helping clients define the scope of work these vendors will provide and in negotiating the associated fees.

And, while we are not attorneys, brokers are providing knowledge to help clients ensure that the business terms in the lease are phrased correctly and provide contract flexibility. For example, I completed a 30,000 s/f lease for a large regional firm at a newly constructed building. As part of the terms, I negotiated the real estate tax clause to read: "The real estate tax bill shall represent a 95% assessed building."

New buildings are never fully assessed until they are at least 90 to 95% occupied. When this building achieved that success 14 months later, our client received a real estate escalation tax bill for $30,000-or $330,000 over the remaining 11 years of the lease. Because the "95% assessed building" clause was written into the lease, the company was able to avoid this additional expense. In other words, a broker's mission is to help clients find the right space and lower real estate overhead.

This consultative role has evolved over time to become the norm in today's marketplace. Our challenge in marketing this skill is that the financial benefits, which can be very significant, cannot always be defined up front--as in the case of the aforementioned tax clause.

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Those of us who have been in the industry for two or three decades have needed to adapt to this new reality in order to stay on top. And newcomers to the business must learn a far more sophisticated trade from the ground up. The lucky ones, including me, work for proactive companies that recognize this shift and have added international capabilities, new service lines or strengthened existing ones, thus enabling their brokers to bring these valuable tools to their clients. Still, we must learn many new disciplines in order to use these tools effectively. We need to create alliances with contractors, designers, IT and telecom consultants, moving companies, attorneys, and more. We must be able to say to our clients in absolute terms: "I can help you with every facet of your real estate activity, whether it be saving money on a single lease transaction or 600, or on a portfolio of owned facilities across the country. I can bring you the people you need and negotiate their fees and define the scope of their work better than you can."

That is our new value. As tenants, our clients need only be in the market when their leases are coming due. We are there every day. And with the many complexities involved in making good real estate decisions, it behooves businesses to find a reliable partner and stick with them.

As a result, today's most successful brokers are finding themselves--with increasing frequency--in the enviable role of exclusive real estate advisor. At Cushman & Wakefield, for example, we have a consulting group that helps clients determine where to open new offices or expand their business. This same group can help companies determine where the best labor will be for them to consolidate. These discussions occur well before there is a real estate assignment, so the real estate advisor of today is also more strategic and can help a company develop its future growth or save money through an effective consolidation/relocation. Companies that develop these types of relationships with brokers benefit from ongoing access to reliable market knowledge and services.

In return, the broker benefits from ongoing transactional business. And with corporate frugality yielding fewer "blockbuster" deals these days, this provides significant peace of mind. As an example, I work with one of the largest accounting firms in the region. The relationship started four years ago with a 30,000 s/f lease in New Jersey. Today, I represent them all over the New York metropolitan area. The small and mid-size deals I am brokering for them are quickly adding up to a healthy total square footage. I also have enjoyed a flurry of referral business from that client, an indication of their satisfaction with the value I add.

Exclusive relationships also are taking brokers beyond their traditional borders. In an increasingly global business world, many tri-state companies have offices across the United States and around the globe. Again, having the resources and geographic scope of a large brokerage company is a requisite to effectively serving clients in multiple markets.

Additionally, brokers that have successfully embraced the consultative relationship are finding that borders are fading for new business as well. Today, I have a client based in Louisville, KY. The company does not even have a New Jersey operation, yet I represent them throughout the nation. I approach this relationship with a proprietary perspective and give advice based on what I would do if it were my company--and my own money being invested in each real estate decision. This provides peace of mind to the real estate manager and senior management, who know that they can trust my counsel. As more and more companies recognize the value that brokers can provide as strategic advisors and partners, our role will continue to evolve. Those of us who adapt to these changes and arm themselves with the knowledge and resources that foster long-term relationships will be best positioned to succeed in this business.

Sean Brady is a senior director at Cushman & Wakefield, Inc. in East Rutherford, N.J.

BY SEAN BRADY, TREASURER,

IOREBA NY METROPOLITAN AREA