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Brokers now full-service corporate advisors.

Real estate brokerage firms today aren't what they used to be. They're better. Recent trends in commercial property leasing have resulted in a higher level and expanded scope of service provided by real estate brokers.

Historically, the traditional brokerage served merely as a distribution center for a fixed commodity: space. There was a given amount of space available, a given number of commercial entities interested in occupying some of that space -- the brokerage was a convenient means for allocating that resource efficiently. Today, however, brokerage firms function as full-fledged corporate advisors, providing vital services from market research to strategic planning.

At the root of these changes-for-the-better lies a fundamental shift in the perception of real estate in corporate America. Whereas, historically, real estate was viewed as a mere platform for doing business -- the place where business happens to get done -- now it is beginning to be appreciated as an intrinsic part of business operations, an asset category that can itself create value, and which must therefore be properly managed, and included in a corporation's business planning model.

Put simply, if a corporation can contain and reduce its long-term occupancy costs, it is able to retain a higher profit margin, thereby enhancing its overall capitalized value. When a large corporation leases hundreds of thousands, or even millions of square feet across the country, the cost savings -- and the resulting "value-added" generated -- can amount to many millions of dollars.

One result of this recent awakening is a more conservative attitude towards the per-employee space allocation within a corporation. Unlike the "boom years" of the 1980's, when a 20-by-20-foot corner office was standard fare for corporate executives, firms are now making more sober assessments of the actual amount of space required to conduct business. Tenants now consult with architects to design better, rather than enabling them to work even more efficiently while containing costs.

Accordingly, real estate brokerage firms such as Williams Real Estate Company, Inc., have redefined and expanded their role in serving their corporate clients. No longer simply a "clearinghouse" for generic commercial space, today's brokerage works closely with each individual client to develop a strategy for real estate management appropriate to the client's needs.

In addition to the diversification of services provided by brokerage firms, their traditional functions have also been revolutionized. In leasing-contract negotiations, for example, the broker now works with the client to iron out the details and quasi-legal issues of the contract (such as: assignment and subletting provisions, exclusions, operating-cost escalation provisions, exiting provisions, etc.) before the lease document is drafted and an agreement is reached. This increases the tenant's leverage in negotiating the details of its lease, and reduces the potential for misunderstanding between owner and tenant at each stage of the process.

Not surprisingly, the whole nature of the broker/client relationship has changed, from the episodic contact every five to 10 years (when a given lease expired) that characterized the old order, to an ongoing, interactive relationship in which a brokerage may represent the same client in 30 to 40 transactions in a single year.
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Title Annotation:Commercial Sales & Leasing; providing wide range of services from market research to strategic planning
Author:Freedman, Robert
Publication:Real Estate Weekly
Date:Mar 24, 1993
Previous Article:As tenants move around, eye need be on retention.
Next Article:Retail lease signings in Paramus.

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