Brokering a reputation

The glut of properties on the market due to the property slump has put power squarely in the hands of the customer, a change that has been seized on by the commercial real estate broker Choyce Peterson

The firm has launched a radical new website that offers free advice to companies on how to renegotiate their leases and take advantage of the current market conditions.

‘Tenants are now the 800lb gorilla and they actually have a lot of negotiating power,’ said company principal and co-founder Alan Peterson.

‘Up till now it is only large companies that have been able to buy in the expertise to really challenge their leases. The recession has now given all tenants that advantage.’

Current market conditions have seen many companies contracting as they lay off staff – or closing their operations altogether. Those companies downsizing have been seeking either smaller premises or changes to their lease that free them of office space they no longer need – a development that has lead to an inevitable focus on the contracts that they signed in the first place. It is this change that Choyce Peterson is seeking to exploit.

‘Around 90 per cent of people who relocate go through a broker to help them find premises. However, far less than that use a broker to negotiate their leases for them, so we are providing an online checklist for people that allows them to do that,’ said Peterson, adding, that it was now possible to not only get a 20 per cent reduction in rent, but also to get substantial changes in sub-clauses.

‘Some agreements have written into them that a tenant cannot sub-let to a neighbouring company in an office block, which was a clause that put the power into the hands of the owner.

‘Another element that we saw growing was the calculation of square footage to include the lobby and machine and utility rooms. Seeing as everyone in a building shares those facilities it was just a tax that allowed a building’s owners to levy an extra 20 per cent. That can now be negotiated away.’

The move by Choyce Peterson to put information online that might be seen as the ‘bread and butter’ of their business is part of a calculated play by the company to build brand awareness.

It’s a trend that others in the real estate industry are expected to follow suit on. By offering free services such as advice on the local community, information about schools, and the culture and lifestyle of an area, real estate companies will enhance the perception of themselves as an organization.

This associative process is now being used by some of the biggest brands in the world to bolster their image, with companies such as Nike now expected to offer a range of services via mobile phone and internet that will have nothing to do with sports shoes, but which will demonstrate community values, trustworthiness and reliability.

A point not lost on Choyce Peterson. ‘We believe that people coming to the site will view us as experts in the market. Some people will use the free services on the site but we think others will consider the process as too complicated and will see the value in using us to negotiate for them,’ said Peterson.

‘We think that this will raise the bar for the whole industry.’

It is a process that is being gradually embraced by other sectors of the real estate market. Competition for customers is leading to a demand for website differentiation that will enhance customer experience and create brand awareness.

United Lane has not been slow on the uptake. ‘It is one of the reasons for our technology,’ said CEO Aamir Butt. ‘The 3D technology we have developed allows customers to get more out of visiting a site and provides them with a free service that lets them decorate and furnish a property and get some idea of its potential.

‘Being able to do that is good for the realtor because it provides them with leads, and good for the client because it provides them with an enhanced service that they did not have before. That enhanced experience builds trust and reputation for the realtor’s website.’