What to Look for When Hiring a Commercial Leasing Manager?

As a property owner, landlord, or investor, trying to rent a commercial property on your own in a highly competitive market like Chicago can be frustrating. On the other hand, hiring a reputable commercial leasing manager as a trusted advisor could save you time, money, and stress. If your current commercial property rental strategy isn’t getting the job done, here’s how to ensure that you hire the best commercial real estate leasing firm to manage your investment.   

What to Look for 

For those that learn how to become a commercial leasing manager - also known as a leasing agent or real estate broker - their job description includes representing the interests of the owner or landlord of commercial property in a real estate transaction.  

Most commercial leasing manager jobs in Chicago come with these responsibilities: 

• Marketing the building 
• Determining fair market value rental rates 
• Negotiating lease terms with tenants 
• Coordinating tours of the property 
• Maintaining relationships with tenants  

Once you’ve decided to work with a leasing agent, these are some essential qualities to look for while narrowing down your choices:  

Reputation counts 

Finding a firm with a solid reputation should rank high on your priority list. Knowing that your commercial leasing agent is supported by an experienced, well-respected team of professionals with solid community relationships will give you peace of mind.    

Various ways to research the reputations of commercial leasing companies include:  

• Reviews by tenant rep brokers in the market 
• Reviews and testimonials from previous clients (online, word-of-mouth referrals, etc.) 
• Rankings in the Chicago Business Journal 
• A list of client references, including names and contact information 
• Length of time they have been in business 
• Types of commercial real estate properties they specialize in (office buildings, retail storefronts, etc.) 

Concerning the last point, leasing an office property requires different skills and knowledge than renting a retail shopping center or industrial warehouse.  

Look for accreditation 

In addition to the firm’s Better Business Bureau (BBB) rating, ask the broker if they hold any of these professional accreditations: 

• Accredited Buyers Representative (ABR)  
• Certified Negotiation Expert (CNE) 
• Sellers Representative Specialist (SRS) 

Check insurance 

Property managers are generally responsible for keeping insurance coverage on the buildings they manage, although those responsibilities vary depending on the contract terms with the property owner. Good property management firms typically carry a business owners policy (BOP), including property coverage, liability coverage, and business income insurance. For your protection, ask to see proof of insurance before signing on the “dotted line.” 

What services to expect 

In addition to the primary leasing responsibilities of a commercial real estate broker listed above, these are other value-added services to look for: 

• Qualifying tenants. When a broker makes sure that potential clients are reputable and credit-worthy, it minimizes your risk. A good leasing agent can also pre-qualify tenants by examining their credit and financial history. 
• Investment services. Suppose you are an investor evaluating potential acquisition opportunities. An experienced leasing manager can help you research the market, underwrite properties that are for sale or off-market, and transact the sale. Some firms even offer an in-house investment sale specialist.   
• Tenant representation. Partnering with a management company with a tenant representation team can help your internal brokers stay connected with potential tenants in the market while receiving periodic updates based on what they have learned.  
• A market research team. A firm’s market research specialists can keep you current on market trends and rates, along with providing an overview of each submarket that includes any current availabilities and upcoming developments.  
• Sales and marketing. The commercial leasing company you hire should have the ability to provide standard marketing materials for your property. Those may include property flyers, leasing signs or banners, a listing page on their website, a detailed floor plan, addition and maintenance of the property on third-party listing sites like CoStar, and an email marketing campaign.  
• Developmental strategy. If you are planning a commercial development, deciding whether to build spec or pre-lease can affect rental rates, vacancy rates, quality of tenants, and more. A reputable leasing agent can help you position your property in the market to attract desirable tenants or industries, often resulting in higher rents and occupancy rates.  

Making the Final Decision 

When your valuable investment weighs in the balance, choosing between several commercial leasing management companies often relies on minor details. One way to make a final decision is by determining if the firm in question has any conflicts of interest, like listing similar properties to yours in the same submarket.  

If the broker already represents a competitive property or fellow property owner, this could cause a conflict as both properties compete for the same potential tenants. If any conflicts of interest exist, it would be best to cross that firm off your list.  

Another determining factor to consider is if the firm has any relevant case studies from past projects they were involved with that resemble yours. Again, finding a trustworthy leasing agent with expertise in the type of property you have available to rent will make a big difference when your future income and reputation are on the line.  

Who Should Hire a Commercial Leasing Manager? 

Whether you have purchased a new rental property or just want to evaluate the performance of your existing leasing team, here are some signs to watch for: 

Your current team is underperforming. 

Perhaps you have been trying to wear both hats while serving as a property owner and leasing manager. Or the team you have now could be underperforming for reasons like outdated marketing materials, substandard market research, a lack of good general submarket knowledge, or poor rapport with tenants.  

If your current leasing team isn’t getting the job done, it might be best to bring on a new one. Low-quality tenants, lots of complaints, too many vacancies, uneven cash flow, and mounting maintenance expenses are all indications that it’s time for a change.  

Your property needs fresh marketing ideas.  

When you are marketing a property, it’s common for potential tenants to get turned off by seeing the same information and campaigns for that property month after month. If your property leasing efforts have become stale, a new leasing team may be able to inject new life into the property. Fresh marketing ideas and leasing strategies can make a big difference in a highly competitive market like Chicago.  

Your already have another team in mind. 

If you recently purchased a new property, you may have established a relationship with a new property management company that you now trust more than your current one. Perhaps you learned about another team from a friend who is a property owner in another submarket. Once you have a reliable leasing agent in mind, there’s no time like the present to bring them onboard.   

How Commercial Leasing Managers Get Paid 

There are usually no upfront fees when you hire a commercial leasing manager. Once you have selected a broker or firm to work with, the two parties will negotiate brokerage fees. These fees, also known as commissions, are paid when a leasing agent leases a space to a tenant. Your fees will be outlined in your listing agreement, a legally binding contract between you and your leasing broker.   

In Chicago, the standard commission fee is calculated as a percentage of the total gross rent to be collected across the life of the lease. This fee is split between the tenant rep broker and the landlord broker, and commissions can vary based on the deal type and property type. The average commercial leasing manager in Chicago works on a salary plus commission basis.   

How Millennium Properties R/E Can Help 

At Millennium Properties R/E, we are your premier partner to buy, sell, lease, manage, and invest in Chicago-area commercial real estate. With headquarters in the Loop, we’re located in the heart of Chicago’s bustling commercial real estate marketplace. Since 1996, we’ve helped hundreds of business clients rent or purchase commercial properties in prime Chicago locations. If we can help you find a first-rate commercial real estate opportunity, contact us today.