Pickier Tenants, Longer Timelines And Free Food: The Life Of Today's Office Tenant Rep Broker

It’s a good time to be an office tenant rep broker, with dozens of options for clients, motivated landlords and accommodating landlord reps. But it is also a challenging time, with the role of brokers shifting, pickier tenants and an unclear future for the office’s role in American working life.

There has been a stark change from the prepandemic days, when tenant rep brokers clamored over rare downtown office availabilities. But while those days are gone, at least for now, it doesn’t take long in the leasing process before the job gets tough again. 

“There's widespread agreement that closing deals is harder than ever,” Colliers Tri-State President Michael Cohen said. “The list of items that are negotiable seems to have grown. I like to say tenants ask for the sun, the moon and the stars. And they get disappointed when they only get the sun and the moon.”

In conversations with a half-dozen tenant rep brokers from across the country, it becomes clear that while this has become a market where office tenants wield a lot more power, they don’t only expect more from their landlords. They want more from their brokers, too. 

The role has become more consultative than strictly transactional, just one of many obstacles making a decidedly tenant-friendly leasing landscape not nearly as friendly to tenant rep brokers. 

Although tenant reps might start with 30 to 40 options in the initial search process, once brokers factor in the financial status of landlords and their clients’ requirements, sometimes including luxuries or bargains, they may quickly be faced with a dearth of options. 

While vacancy rates remain high, sought-after, top-tier office space remains in short supply and is often the subject of fierce competition. JLL data found that offices built in the last decade have leased 137.6M SF since mid-2020 while anything older has struggled, with more than 400M SF of negative absorption.

And smaller space requirements mean tenant reps are trying to piece together decent commissions amid a lot more small- and mid-sized deals, which tend to take a lot more time and hand-holding compared to a more formulaic way of doing business just five years ago. 

“It's not like prepandemic, where there was all this demand, things were flying off the shelf and you're competing for space. That world has totally changed,” said Avison Young principal John Cashin, who is based in San Francisco. “Today, there’s less deals and the same amount of brokers.”

And there is more complication. Just defining what the client needs requires more work and consulting in the new normal. Companies fear tying themselves to outdated office space that doesn’t compel workers to come in regularly, and balancing the differing opinions of leaders remains challenging. 

This has made many brokers see themselves as client consultants first, spending much more effort figuring out what a potential tenant needs before even looking at real estate. 

“Here we are four and a half years into this pandemic, and most companies still don't know what the new purpose of their office is,” said CBRE Global President of Advisory and Transaction Services Whitley Collins.  “You can't just show up and help the client make a deal. We're now having to show up and help clients make decisions before they can make a deal.”

Take the nation’s capital. Even in a market where just under a quarter of offices are vacant, per recent CBRE figures, it’s taking more time and effort for tenant rep brokers to close.  

D.C.-based JLL Managing Director Anna Shaffer said a process that might have taken 12 to 16 months now becomes 18 to 36. 

“That conversation is taking way longer than it used to,” said Shaffer. “Now you’ve got to build in that extra time to negotiate a package that works, gets them the space they want and what they’ve promised their teams.”

Working with trade associations, which form an outsized part of the capital’s tenant base, becomes even more complicated, she said. These organizations will have large boards of directors, many of whom lead companies that themselves have been through debates over office policy, leading to long-lasting debates about potential office locations. 

Ultimately, the choice isn’t that varied. Most clients, especially top-tier tenants or those seeking substantial space, seek out Class-A space. While marketwide stats highlight the massive amount of unused and underutilized office space, buildings considered Class-A and trophy remain in short supply, giving their owners substantial bargaining power. 

“Say you're a high-end law firm competing for space and you want to be in the top two floors of the bill, because it's a prestige thing,” said Shaffer. “Good luck finding it.” 

Another tricky complication remains landlords and their financial situation. Brokers need to do additional homework to make sure potential landlords won’t suffer additional financial strain and need to hand the keys back on their buildings.

Collins said it has “rocked” the office leasing business, and scuttled some nearly signed leases, due to the additional need for transparency and banking background check. The pressure goes both ways. Landlords, looking at tenants as potential liabilities, demand higher security deposits and more scrutiny as well. 

“They want to make sure everyone's got skin in the game,” said Shaffer. 

Amid the complications, there are some shifts making things easier. Cohen noted that five years ago there would always be occasional landlords who would make things difficult with specific clauses in their lease that would require additional negotiation. 

Today, he’s seeing a lot more leases where it’s evident the landlord is making an effort to be more middle-of-the-road to help get deals done. Tenants demand landlords that don’t simply sign a long-term lease and step away, Collins said. They want a partner that, for the duration of the lease, is consulting and collaborating to make the environment the best it can be for workers, and one willing to show flexibility.

Landlords and their brokers aren’t just being more obliging to tenants. They’re also applying an age-old negotiation tactic for tenant rep brokers: greasing the wheels.

Since leasing and real estate information has become more widespread and commoditized, Cohen said, landlord reps are reaching out months before a tenant’s lease is due to be up, asking brokers to bring their clients by for a tour. The follow-up is “tremendous,” he said. And at those showings and broker events, Cohen said he’s been given $100 gift cards just for showing up. 

“A starving broker could do very nicely and get fed very well going from event to event,” he said. “And not only that, you get paid to show up.”

Brokers will ultimately seek out the best deal for clients. Cohen and others were clear that gift cards aren’t going to change their commitment to what’s best for their client or close a deal.

Business is back, to a degree. Transaction volume remains down, but not as much as people think. Many markets have seen activity resume in recent quarters. Nationally, with a 15% jump in leasing volume between the first two quarters of the year, activity in 2024 has hit 90% of prepandemic volume, according to JLL. 

Landlords have also been successful with spec suites, Schaffer said, chopping up and retrofitting existing floors, and making it easier to lease via proactive investment in their properties. 

But one thing that reigns supreme in today’s office market is choice, both to the advantage and perhaps chagrin of tenant rep brokers.

“It's a luxury to be able to be choosy,” Cohen said. “And tenants are taking advantage of that luxury.”