Patrick Reynolds, CCIM

If you run a retail business, hire a RETAIL broker. It does not have to be us. The big brands like chicfila, Mc Donald’s, Starbucks, etc use small local shops instead of the big firms and national tenant rep accounts. There is a reason why. Most national tenant rep companies come from an office background and won’t use a local counterpart. I’ll explain how that will blow up your expansion plans. I’ve worked office and industrial in my career for years but retail is the most complex leasing process of any product type. It’s dependent on the ability to predict consumer behavior and the impact of a center’s positioning, visibility and co-tenancy on sales. It’s more marketing and sales than it is real estate. National brokers, specially the groups that do national tenant rep the same way they handle office, do their site selection backwards. It frustrates all the local brokers and landlords at minimum and isolates their client from deals and market intel at worst. Typical retail site selection centers around finding your ideal customer base through demographics, trends and local knowledge and narrowing down locations, then specific spaces within those locations to capture those customers at the right time of the day. Then it’s pushing your brand and promoting to the landlord so they see the value of your brand in their center and negotiate with you accordingly. The large tenant rep groups that do a lot of office do it this way instead: Draw a radius for a submarket, mass email all property owners in that area and send a request for proposal (RFP). They don’t disclose much or any about the tenant, their quality or the customers they bring in and the same multi page RFP is sent to everyone. Then they get the responses back (less than 10% will respond because that’s not typical practice in retail and it asks questions about amenities, elevators and other things that don’t apply ) and they put it in a spreadsheet to discuss with the client. The focus is on the financial responses from landlords, not the actual properties or specific spaces. Then they often demand (yes demand, maybe extort is a better word) above market compensation. They use your brand and say you will walk if they aren’t paid what they want. Problem is, most landlords know nothing about your brand and how you work in centers so most the time they tell the broker with his lengthy forms to just beat it. Your brand ends up seeing almost no spaces that fit and has no leverage because the landlord doesn’t see how your brand improves the value of the center. They also already have deal fatigue from dealing with your broker. If you get to LOI stage…. this is where I see most tenants give up and realize they picked the wrong brokerage firm. The broker negotiates with their “proprietary LOI” which is 7-8x longer than a typical Retail LOI and includes language that matches office buildings and industrial and doesn’t fit how CAM and co-tenancy clauses work in retail. Meanwhile almost no time was spent walking the market, checking access and off ramps, visiting the center and talking to neighboring tenants about peak hours, etc Large national retail brands almost never do national accounts and if they do, require a local counterpoint to be boots on the ground. The only retail brands we see run with the national tenant rep groups are small franchisee groups with high failure rates. Small retail groups with less than 100 locations sometimes fall prey to the firms that pitch they will be your national real estate department for free. You need local knowledge to maximize your sales and minimize store closures. Don’t trade that for spreadsheets and corporate calls. The best way to vet the brokers is to ask for a client list. You want to be in the company of brands you know and respect so landlords are pitching your broker sites for the tenants he/she reps, not the other way around.