Frequently Asked Questions
Tenant Representation FAQ’s
At SCGWest our highest priority is the interests of the tenants we represent.
When real estate service providers represent both landlords and tenants, fiduciary obligations are inevitably compromised, and service providers assume the role of mediators rather than exclusive advocates.
It is because of this that we never represent landlords, developers, property managers, real estate investors, or any other organization against which our clients will negotiate. This gives our clients the peace of mind that we will never undermine their best interests with strategies intent on winning future business from real estate owners or developers.
A true “tenant representation broker” never represents landlords. Traditional brokers represent landlords, or have interests in property, creating the conflict of interest that undermines their fiduciary capacity. A traditional broker may claim to work as “tenant rep” on a particular transaction; however, their conflicts persist, as the landlords are still potential customers of that broker, thereby undermining the broker’s credibility and objectivity. While an individual in one of the national brokerage houses may attempt to limit his or her services to tenant representation, the fact remains that the firm as a whole makes the majority of its revenue from landlords.
A broker cannot serve two parties with opposing interests. Landlords want the highest rent possible, for the longest fixed period of time and the smallest outlay of upfront costs. Tenants, on the other hand, want to pay the lowest possible rent with the greatest lease term flexibility and concessions from the landlord. One person cannot accomplish both objectives. It can be equated to an attorney representing both the plaintiff and the defendant in a legal case — it is impossible to serve both masters. To represent both landlords and tenants, either in one transaction or over a period of time, creates a conflict of interest that negates any meaningful contribution the broker might have made in their advisory role.
Quality tenant representation brokers can educate, empower and counsel their clients while leading a negotiation with market insight, strategy and diligence. In real estate negotiations, information is power. Landlords, by definition, are in the real estate business. Most businesses are not involved in real estate on a day-to-day basis, and are therefore not fully appraised of market dynamics and negotiation opportunities. Landlords would just as soon keep it that way, while a strong tenant representation broker will level the playing field and provide meaningful, time- and money-saving advice.
It depends. We help companies to ask the right questions in evaluating lease versus buy opportunities, and to model the financial implications of each scenario. With so many factors to consider in making the decision to buy or lease space, we have designed a worksheet that enables you to customize several options based on your own unique business circumstance.
Renewal options are always a good idea, but rarely the best way to negotiate your rental rate under a new lease. These renewal rights are typically written so that a company must exercise the right well in advance of the lease expiration, as well as in advance of determining a new rental rate for the space. Landlords love when a tenant exercises a market rate renewal option because the tenant is typically captive and forced to negotiate for a lower rental rate without any leverage. A good tenant representation broker can educate a company on how to navigate a lease renewal without falling into the landlord’s renewal option trap.
Most landlords recognize and respect our role in a real estate transaction. If you have a good relationship with your landlord, our work can preserve that relationship while also ensuring that your lease terms are competitive. We are professional and courteous, and as an outside third party we remain objective and can ensure that your interests are protected. SCGWest understands the importance of a good relationship between a business and its landlord, and we help to maintain that bond while delivering our clients the best market rate possible. With the volume of leases we complete each year, as well as our local market expertise, we are able to bring leverage and credibility to ensure you are offered the best economics available.
Every client is unique, but the basic elements of our process are commonly applied. We first spend time asking thoughtful questions at the outset of a project to better understand the client’s true objectives and constraints. We then work to define the project, examine the marketplace to develop compelling space ideas and alternatives, engage in strategic and efficient negotiations, and follow through with diligence and professionalism, including contract review, project and construction management and project close-out.
We do more than that. At SCGWest, we are capable to help corporate office, municipal, medical and nonprofit clients with their real estate matters. We represent tenants and buyers with their real estate needs both in California and nationwide.
Not if your broker is SCGWest. Our highest praise is when a client says to a peer, “You would be crazy not to at least talk to SCGWest first.” Our intent is to add value in every interaction and to remain focused on what is best for the client. We know the market better than anyone else — and we guarantee our results.
Design & Build FAQ’s
SCGWest provides a collaborative Integrated Project Delivery process that includes the real estate, design and build-out construction services for tenants. Services include: tenant/buyer representation including entitlements, lease negotiations and work letter review, site/building due diligence thru scheduling, budgeting, design, construction, FF&E and occupancy. If you or your company are opening a new business location, we manage the process from start to finish. A completely integrated turn-key approach.
The earlier that we are brought into the process, the more value we can bring to the table. Regardless of how far along a project is, we can always deliver valuable advice and leadership. With a high quality project team on board, potential problems can be identified and averted, such as work scope definition, budget allocation, building material selection and work schedule coordination.
SCGWest offers an Integrated team approach to projects and we feel our clients’ needs are best served by selecting the team that best fits each client’s specific needs and the unique characteristics of their project. We typically utilize and combination of our internal employees and our vast network of industry consultants and pre-qualified sub-contractors and vendors. By focusing on assembling the best team for the job, we are able to obtain “best of class” services for our clients at competitive rates.
Yes, SCGWest typically acts as the “Master Builder” and either performs the design & engineering services in house or will hold the contracts with any consultants related to the architect, engineers or various sub-contractors.
When necessary, SCGWest will offer our Construction Management services as a third party consultant to the Owner. In this capacity, we will help to review and negotiate the terms and conditions of each of these contracts for our clients and make final recommendations for their approval.
The section in a commercial real estate lease that addresses design and construction of initial improvements is typically called the work letter. This section of the lease should address:
- Tenant improvement allowance (TI or TIA), and the methodology and requirements for fund disbursements
- Process and protocol for tenant submittals and landlord approvals
- Process and protocol for change orders, landlord or tenant project delays and/or cost overruns
- Definition of building standard improvements
- Landlord warranties
- Responsible parties for landlord and tenant, and the appointed project/ construction Manager
- Other relevant project details
It is important to have a qualified project team review this important section of the lease. Failure to clarify each item and clearly understand the intent can cause significant issues once the lease is signed.
For optimal schedule benefits, it is recommended to engage the team during lease negotiations or before.
No. We are a fully capable general contractor.
No. We have a fully assembled project coordination and construction management team on board at SCGWest.
Depends. Some Franchisors have already completed program standardization and are capable of creating construction documents internally and have a full construction management staff (typically companies with 500+ locations). If this is the case, we are still able to add value and complement their processes. We can offer a tailored version of our turn key project approach if necessary.
We follow a step by step internal process of over 350 tasks to be completed during real estate lease, design, construction and project closeout.
No. The time it takes to gather these bids outweigh any possible savings that would have resulted from a lower bid price. You may receive a lower bid, but in construction you get what you pay for. If a price is lower, it is because corners are being cut. All companies have similar cost for materials and labor so theoretically the price should be close to the same. If one contractor is drastically lower in price, it is for a reason, and not a good one.
We estimate about a 10% savings from cost avoidances vetted out during design. There is also savings from time efficiencies and error mitigation.
No. Our Integrated Project Delivery Contract is structured in multiple phases and can be structured to be executed at milestones throughout the process.
Due to our communication during the lease negotiations and processes in place this risk is greatly mitigated. We will not execute a contract and begin the design phase unless all parties have reviewed the lease or purchase agreement and are confident that a deal will be reached. However, unforeseen circumstances do occur, and the deal may not come to fruition. Not to worry, your design fees will be applicable to another location and we will incur the loss of having to complete the initial design twice.
We Turn Your Vision Into A Reality
The key strength of SCGWest is the quality of the individual team members and the ability to form a team perfectly suited to any project with knowledge, competency, and experience unrivaled by our competitors.