In the hit movie Moneyball, Brad Pitt’s character challenges the collected wisdom of traditional players, managers, coaches and scouts in the front office by applying a rigorous analysis of data.

But the decisions around commercial real estate for businesses is often not about data – or is it? It is for a new breed of commercial real estate brokers who service Americas best companies.

Boston Consulting Group’s Mahlon Apgar, IV wrote in his Harvard Business Review article What Every Leader Should Know About Real Estate that executives often feel overwhelmed by CRE decisions – I’ll paraphrase his ideas for easing CRE angst below.

• Collect data on your real estate
• Pay extra for flexibility
• Embrace sustainability
• Use a good broker

Concrete Proof: A poll by Cardinal Partners points to the reality of the situation – here are some of the responses that show how brokers are typically chosen:
· “The broker started calling on us ten years ago, and we kind-of like him.”
· “The broker was a friend of mine at my club and he had a relationship with my landlord.”
· “There was a beauty contest and we went with the biggest firm.”

Truly, does it really matter who you use? Is it worthwhile to take the time to find…
· A super broker who sets goals and pulls-out the stops to win on your behalf?
· A competitor who is comfortable being accountable for results?
· An assertive business-pro who faces troublesome issues willingly?

The right broker will save you 20% on your facility costs and give you confidence to make a complex decision with clarity of thought.

My favorite broker in the world is a tough talking, highly experienced broker from New Jersey named Andy Zezas. Yes, he meets all of the NJ stereotypes of being hard-driving and confident, but also:
· Andy is effusively social and polished – he understands people and gets along with others.
· He does his homework and he is always prepared – he collects data for his clients and provides a highly quantitative analysis to support his recommendations
· He seeks innovative approaches and solutions that allow his clients to breathe easily because they know they have a true real estate advocate at the helm of the deal.

Andy has a great list of clients – all of them found him by being referred by clients, inquiries from his books, and interest from a TV show he hosts. He saves his clients up to 20% on their facility costs and he gives them the confidence they need to make complex real estate decisions. His client’s love him – and he is constantly going full-throttle on their behalf.

How do you find super brokers outside of New Jersey? Are you interested in a relationship with your broker where you feel he over delivered and was underpaid? Check this out:

Go For Broker: An Executive’s Guide to Hiring a Broker for Today’s Complex Deals is available on Amazon

There’s a big difference between wanting this kind of relationship and actually getting it. Without help, you might as well be poking around blindly in the dark – so to help out, we’ve come up with a book that –

Gives you 9 invaluable tips on how to build a successful relationship with a commercial real estate broker,

as well as inside information on how the commercial real estate game brokerage game is played.

Last week I got my “forever bike,” the last bike that I will ever need. A few years ago, I learned that it is powerful to have celebration during the milestones associated with the flow of deals that come through our brokerage office. I had a picture of my Cannondale High-Mod Dura-Ace Di2 Disc next to my computer, which kept me focused on getting a deal completed during the grind common on all deals. I love this bike, and I have been riding it every chance that I can.

The problem is that the bike is in short supply and I almost lost it before the deal closed. The bike shop called me to say that there was one left at the factory, and if I wanted it, I would need to order it now. But the deal was not closed yet – if I bought the bike, and the deal did not close, I would have a hard time justifying the purchase. But the leases had been negotiated and they were sitting on the CEO’s desk to be signed. I reasoned that the deal was close enough to being done and it was okay to spike the ball and give the shop my credit card number.

But a problem arose before I’d completed the deal. That bike is in short supply, and I was in danger of losing it. The bike shop called me to say that there was one left at the factory, and if I wanted it, I would need to order it now. I knew I would have a hard time justifying the purchase if I bought the bike and the deal didn’t close. But the leases had been negotiated and they were sitting on the CEO’s desk waiting to be signed. I reasoned that the deal was close enough to being done and it was okay to spike the ball and give the shop my credit card number.

When the CEO changed his mind and decided to re-visit the market one more time, I found myself reacting a lot differently than I would have without the bike! Typically, I am the strong advocate for my client, and in this instance I would have kept my cool and developed strategy with my client. Now, my initial reaction was to speed up the deal and get it closed. Thanks to that stupid bike, I had to work hard to make sure that my advice to my client stayed “pure.” With all clients, I use a negotiation worksheet to help re-check my gut reactions to make sure that we are always working towards my client’s best interest.

From time-to-time you may wonder if your broker is “in the deal.” In the October 2014 issue of Negotiation Briefings, tips are given to hiring an agent and how to avoid what is explained as “motivational blindness” – the tendency to not notice the unethical actions of others when it is against our own best interests to notice. In my book Go For Broker, I explain that most of the frustration that people have with their broker is a result of not understanding how they are motivated. Often, a broker’s interests are misaligned with their client’s unless they are motivated by pro-social factors, such as retaining long-term relationships and the desire to over deliver on the behalf of the client.

Here are some tips to make sure that your broker remains an indispensable member of your team, even when he has already spent his commission:

• Hire the right broker in the first place. Check the team’s references, ask for evidence of experience, review their processes and ask the broker to put some skin in the game to align their interests with yours.
• Clearly define your expectations for your broker. Establish a mandate for your broker and meet with her from time to time to discuss progress on the deal. At Cardinal, we establish goals for the deal and base our fees upon the client’s satisfaction on these performance indicators.
• Openly discuss when there are instances of the broker’s interest overshadowing your interests. I once had a client say to me, “You are just wanting me to accept these terms so that you can get your commission in a hurry!” That was a flat-footed approach to addressing the right issue. This client would have been more effective, and given me the chance to be a better consultant on his behalf, if he would have simply asked me some open-ended questions about the logic in my recommendation for the counter-offer.

As soon as I started getting the uneasy feeling of being conflicted with my client, I got off my new bike and pulled-out a trusted negotiation worksheet my firm uses to help me re-check my reactions and make sure I was working toward my client’s best interest. The Prepared to Win-Win™ negotiation worksheet remind myself of the client’s goals and the history of the transaction. The Prepared to Win-Win™ worksheet assured me and the client that our interests were aligned when the third-party got squirrely. Then I got back on the bike and had a blast!

My father sold life insurance. I remember overhearing him talking to a neighbor about it at a cocktail party once. I may have only been seven, but I could sense that the topic had a deadening effect. As I got older, my lack of interest in the family business never changed. So, at 21, when it came around to the time to make a decision about what I was going to do for a living, it took me about two seconds to turn away the offer to join my dear father and decide instead to go into the sexy business of commercial real estate. A profession where dreams are built!

Now a mid-life vet of the real estate game, I can report that there is nothing sexy about the profession I chose. The decisions are complex and time-consuming. Our clients, often-busy executives, are quick to delegate the real estate decisions to managers. I can’t say that I blame them. Commercial real estate can be knotty, byzantine, convoluted, intricate and occasionally populated with people who are devious.

In another post, I wrote Why Going It Alone Is a Great Idea – where I cautioned against delegating real estate decisions to others with little real estate experience. In this post, I give a few tips from expert executive delegators that I have seen in action.  When deciding whether to delegate or take control of the decisions yourself, keep the following in mind:

• How does real estate rank on your balance sheet as an asset or liability? Treat it accordingly.
• Forget about buying real estate, unless there is a concrete compelling reason. The amount you pay to lease is worth the flexibility you will get.
• Ask the project manager handling the real estate to keep the decision as quantitative as possible – then dare to be intuitive.
• Find an expert to help you. If you follow the tips in Go For Broker – An Exec’s Guide for Hiring a Broker for Today’s Complex Deals (a plug for my book you can find on Amazon) — you will maximize results by aligning everyone’s interests.

Recently we worked with a fast-growing technology company to open a new office in another state. The executive really impressed us by doing the following:

He created a vision for the office that was simple, practical and powerful: The executive took the time to build the case for the new office and he articulated it in one or two sentences. He used some concrete data, and he had a few examples, which were more like stories, that supported his vision for the new office.

“We can do it better together”: The executive said he chose us because he was “fed-up with the self-reliant, rugged-type of brokers who do not work as a team,” then he charged his project manager to lead the team with a professional space planner and attorney – all engaged before specifications were drafted, locations toured and proposals delivered to landlords.

He engaged a superior and energized project manager: The executive did not have someone on his staff available, so we helped him outsource the job to someone who understood that his job was to be in charge, not in control. The brokers were aligned on what needed to be accomplished and the timeline. We all used technology called Basecamp to communicate, establish tasks and maintain files. We set-up regular check-in times so that we updated on each other’s progress.

The result was that the executive was confident when delegating a project that became one of the company’s biggest assets. The bottom line is that in real estate, you can have some fun and maximize satisfaction and results when you surround yourself with others’ strengths!

Jason Fried and David Heinemeier Hansson, founders of 37signals, have authored a thought provoking and fun to read book called REMOTE, Office Not Required, a book that asks “Do you truly need office space?”. These guys debunk assumptions about the benefits of traditional office environments to help build the case for working remotely.

Here is one example of a section that I found profound titled We Paid A Lot Of Money For This Office!

“This probably ranks up there for the most foolish excuse to forbid working remotely, but that hasn’t prevented it from being aired from time to time. You really shouldn’t have to dignify it with a response, yet you might just have to, so here we go.

If someone has run a business well enough to be able to afford a fancy office, you’d think they’d be familiar with the idea of “sunk cost.” But hey, we all look at the Kardashians and think, How on earth did they get where they are? Just summon that feeling, suspend your disbelief, and strap on your tweed blazer for a lesson in Business 101.

Sunk cost means that the money spent on the office is already spent. Whoever paid for it is not getting it back, whether it’s being used or not. So, rationally, the only think that matters regarding where to work is whether the office is a more productive place or not. That’s it.

If you want to get all mathematical about it, take out a napkin and jot down a few numbers. Say you can get four productive hours out of the office (ha!) and six productive house out of working from home. Thats a 20 percent more productively by working in your living room. Who’s going to argue against that?

Photo Courtesy: Mark Matcho

How much money are your leaving on the table in your real estate transaction? Commercial real estate industry information indicates that a savings of 10-20% of total facility expense can be achieved through better lease management and process orientation. That percentage adds up to a serious amount, and could have a direct effect on your bottom line. As commercial real estate becomes increasingly complex, those with little experience should not try to solve their real estate solutions without considering the help of a real estate professional that can provide you with the proper tools and processes. Having the right tools and processes is a Win-Win; saving the company money and taking stress out of the transaction.

Having the right systems in place is so important that 57% of executives said that they may be leaving money on the table by having inadequate real estate processes and controls. This statistic came from a survey performed on non-commercial real estate executives about the areas of real estate that are the most confusing, problem inducing, and mismanaged (p. 22, Survey performed by Cardinal Real Estate Partners; link to survey). The purpose was to uncover the issues executives were facing and to identify what tools were readily available to aid in providing clarity to complex real estate situations. Given this high percentage of executives that agree that there are ways to improve the processes by which they handle their real estate it is clear to see that you as well could benefit from being well prepared.

Preparing for your real estate needs does not require a degree from an ivy league school, but it does require that you seek out the right team as well as resources leading up to your transaction. Interestingly enough, according to the survey mentioned above, 55% of all respondents do not go to brokers to receive most of their commercial real estate advice (p. 21). So why is it that those in the C-Suite have such distrust for commercial real estate brokers? The survey states that the majority believe that the broker offers support but not as much as the company leader desired or expected.

The best way to get your broker to offer support continually throughout the entire transaction is to set up the agreement that aligns your interest with yours. One that aligns their fee with your opinion on the outcome of your transaction. This “fees-at-risk” method is generally reserved for larger clients (i.e. Bank of America), but remember no commission percentages are set in stone, as per the rules set forth by the real estate commission.