Many commercial real estate companies offer consulting as one of their services. This is a powerful and often overlooked tool for the investor, retailer, and property owner. For a negotiated fee, the knowledge, skills, and market savvy of real estate professionals can be at your disposal. Unlike the situation of agency, where an agent/broker is legally constrained to represent and act in the interest of the property owner, a consultant is not.

The commodity consultants provide is information. The kinds of information that might be valuable are:

• Trends - what are the growth areas and why
• Communities - which communities welcome business and development
• Investment analysis - How do you approach the decision making process - What tools to use
• Demographics - What are the characteristics around a site
• Personalities - Who makes a deal easy or difficult - who is ethical

As a consultant, a real estate professional can use their experience and knowledge to evaluate a site. For example, acting as your advocate, a real estate professional might look for the number of means of ingress and egress, compliance with current Americans with Disabilities Act (ADA) requirements, location of heating and air conditioning zones, zoning considerations, specific lease clauses or deed restrictions, evidence of soil contamination, and countless other issues which might affect your use of the property. Any one of these items could complicate a sale or have a significant economic impact.

Commercial real estate agents/brokers and their residential counterparts are required to identify to a potential buyer material facts. This means that if an agent/broker is aware of a roof leak, he cannot hide it from a potential buyer. An obnoxious neighbor is not considered a material fact nor is poor heating and air conditioning flow. An agent/broker, while not hiding material facts is obligated to present a property in the best possible light. A consultant can ethically present a complete picture.

A real estate consultant is not a substitute for an experienced real estate attorney or an accountant. A real estate consultant should be considered part of a team of professionals who assist in obtaining the best deal for a client.

This article reflects the opinion of the author and not necessarily that of MJ Peterson's corporate philosophy.

Special to the Buffalo News
By Stuart Gossels

Commercial Real Estate brokers provide a range of services. From selling and leasing property, to site selection and market analysis, a commercial real estate broker can save you time and money. Commercial brokers know the market, know many of the landlords, and are aware of strengths and weaknesses of properties, locations and landlord's personalities. Commercial brokers also qualify the customers, screen out the "tire kickers", worry about the details, and help the buyer and seller come to a meeting of the minds. Commercial brokers provide the information that assists a savvy buyer/seller to be successful.

There are many services commercial brokers offer. They include property analysis, developing a marketing plan for sale or lease, implementing the marketing plan, promoting market awareness, screening potential customers, networking, negotiating, and following the details. All of these functions require time. Isn't it better for an executive/proprietor to focus on running a business where they have expertise instead of running around spending valuable resources looking for property? It is in their best interest to delegate commercial property issues to a commercial broker who has skills and knowledge appropriate to that function.

Working with a commercial broker has many advantages. We spend the time to follow the details. We know the market and where the best deals are. We know which landlords are willing to give to get tenants. We become the facilitator between the parties to ensure that negotiations proceed smoothly. We take the time to gather the appropriate information. We spend the dollars to promote the property.

Anytime you are considering any commercial real estate transaction, your first step should be to select a commercial real estate broker. Buyers and sellers, tenants and landlords, all benefit from a commercial realtors' experience.

This article reflects the opinion of the author and not necessarily that of MJ Peterson's philosophy.

It used to be simple. A commercial real estate agent/broker represented the individual or firm who established a commission agreement with the agent/broker. The payment of a commission does not, in itself, establish the agency relationship; the listing agreement establishes the agency relationship. Now, there are tenant representatives, buyer brokers, and many other arrangements where a real estate professional has the potential for mixed loyalties. While state law requires residential brokers/agents to establish in writing whom they represent, the same does not yet apply to commercial brokers/agents. Some States have adapted their real estate laws to promote the concept that a real estate professional is a facilitator with no legal obligation to any of the parties. New York does not recognize that concept.

There is an advantage in any transaction to having as much relevant information as possible. In addition, not all facts are material. A material fact is information about a known defect or problem; e.g. a leaking roof. By law, a real estate professional cannot hide or misrepresent a material fact. Facts like the poor location of a thermostat or poor lighting in a storage area, while not flattering to a property, are not material. The reasons a seller is motivated to sell is also not a material fact. The issue in agent representation and loyalty is who gets what kind of information.

When a real estate professional represents the landlord or seller, a customer is only entitled to material facts and facts considered flattering to a property. It is the consumer's responsibility to use diligence in investigating the property for additional facts. There is no conflict of interest for the real estate professional. When a real estate professional is engaged as a tenant representative or as a buyer's broker, the agent/broker has a responsibility to provide the additional non-flattering facts that allow the consumer to make a better decision. If the agent/broker already has an agency relationship with the seller/landlord, there is a conflict of interests.

Because the legal issues regarding tenant representation and buyer's brokerage are difficult to understand, some agents/brokers avoid this type of representation; others relish it; still others muddle their way through. Some brokers act only as tenant representatives/buyer's brokers. There are no potential conflicts because the broker has not entered into any listing agreements. Other brokers avoid representing tenants and buyers as a rule. They avoid conflicts of interest because they always represent the landlord/seller. The full service brokers have the most difficulty.

Full service brokers have no conflicts of interest representing tenants or buyers when handling "other" broker's listings as long as the "other" broker is informed that the agent/broker is acting on behalf of the tenant/buyer. It is only when handling "in-house" listings that the conflict of interest arises. The best way to handle these situations is to establish in writing, during the property listing process, that the broker could potentially represent a buyer/tenant. A lesser solution is to document, in writing, prior to releasing information to a potential buyer/tenant, that the broker may be acting on behalf of the tenant/buyer and allow the property owner to determine if information can be provided. Under no circumstances should a broker represent a tenant/buyer without consent of the property owner.

The facilitator concept has been adopted in other states to eliminate any potential conflicts of interest. The agent's/broker's role in the transaction is to make the deal happen and the best deals are where all parties are happy with the outcome. The broker/agent has no loyalty to either party and is paid out of the proceeds of the transaction. It is too early to tell if this concept works as well in practice as it does in theory.

This article reflects the opinion of the author and not necessarily that of MJ Peterson's corporate philosophy.

Special to the Buffalo News
By Stuart Gossels

When a landlord approaches a commercial real estate agent/broker to market his property, there are some standard questions that the landlord should anticipate. An experienced broker knows the questions potential tenants routinely ask and will query the landlord for the information prior to meeting with a tenant. Examples of these questions are:

• Minimum & maximum term of lease
• Amount of security deposit
• Leasing rate including CAM charges
• Improvements/build outs
• Insurance
• Hours
• Utilities/HVAC
• Minimum space subdivision
• Legal documents
• Acceptable businesses

Generally, the answers to many of these questions depend on the quality of the potential tenant. A landlord is usually willing to provide a longer lease, require less of a security deposit, and be willing to contribute to the build out for a stronger tenant than for a weaker tenant. Also, a tenant who leases more space is more likely to obtain concessions during the negotiation process.

Leases are the major legal document necessary. Most landlords provide their own leases. Occasionally, a landlord will ask for a sampling of leases and select from among the sample. The lease plays a critical role in the negotiations. Many tenants request a copy of a landlord's standard lease so they can evaluate the lease as part of the negotiation process. When the landlord and tenant reach a "meeting of the minds", it is important that a lease be prepared as soon as possible. Delay at this stage of negotiations almost always kills deals.

An important consideration is the type of businesses that are acceptable or unacceptable. Certain businesses subject a property to unusual stress. For example, a coin operated laundry may tax a septic system, pump moisture into the air, and promote minor vandalism. A landlord may decide that this type of tenant may not be desirable. The better a commercial real estate agent/broker understands the landlord's wishes, the better the agent/broker is able to screen the potential tenants. Communication and experience are essential.

This article reflects the opinion of the author and not necessarily that of MJ Peterson's corporate philosophy.

Special to the Buffalo News
By Stuart Gossels

In previous columns I have stressed using qualified professionals to protect your interests. Time and again, individuals are caught unaware of the implications certain clauses have in documents they have signed. One document commonly found in the practice of commercial real estate is a lease. Leases are complex documents. Most are written to protect the landlord against anticipated issues of contention. Some leases are more favorable to the landlord than others. In almost all cases, most terms and conditions contained in a lease document are negotiable. Do not rely on a commercial broker/agent for legal advice; always confirm a broker/agent's opinion with an attorney.

The time for negotiations and review is before a document is signed. Often clauses that later may impact a business or individual could have been excised during negotiations without conflict. Timing is important. There is less likelihood of a clause being modified or removed when it has an economic impact on the landlord.

For example, some leases contain a clause that allows a new landlord to evict a current tenant under certain specific conditions. This clause is intended to provide a new owner flexibility. This clause is not in the best interest of the tenant. A tenant works to establish a customer base, develop a reputation, and may invest in improving the location. Tenants do this because they believe they can recoup their investment over the term of a lease through increased sales. Consider what happens when the property is sold. Their investment may be lost and there may be no legal recourse.

This kind of clause can be negotiated out of a lease when the tenant first occupies the space. Most owners would rather have a good tenant than a clause that offers flexibility to another owner.

This is just one example. Unfortunately, we see the consequences all too often. The worst part is that, in almost every case, the whole issue could have been avoided. Have an experienced real estate attorney review the legal documents and make sure there are no hidden surprises. It is important that clauses identified by an attorney as detrimental to a tenancy be negotiated out prior to a document being signed. Protect yourself by reading and understanding all documents related to a transaction.

This article reflects the opinion of the author and not necessarily that of MJ Peterson's corporate philosophy.