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Fifty Shades of Grey Area

Examining grey areas, disclosure and trust in commercial real estate representation

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Ryan Mitchell

"It's a relationship-driven business."

Yes, commercial real estate is a relationship-driven business — always has been. What business isn't? However, with an ever-growing number of brokers pursuing a finite number of businesses, success in the San Diego commercial real estate industry is, more than ever, determined by the quality of one's relationships. Logic dictates this is the way it should be. Company leaders prefer to work with people they know, like, and most importantly, trust. With trust at the very core of quality commercial real estate representation, it's important for companies and business owners to examine the issues of dual-agency and disclosure prior to choosing their representation.

Imagine you're involved in a legal battle and you find out your attorney is representing both you and your opposition. With whom does the lawyer's fiduciary duty lie? Most would agree using this type of representation is inadvisable, yet it's surprising how often savvy corporate leaders fail to draw similar parallels in their commercial real estate representation. When you apply the same concept to commercial real estate firms that represent both landlords and tenants, it's easy to see how conflicts of interest can arise.

In a recent study, the Center for Real Estate and Urban Analysis (CREUA) at George Washington University set out to determine whether conflicts of interest occur with firms that represent both landlords and tenants in commercial real estate. They found that (1) the commercial real estate industry lacks transparency; (2) the market is consistently landlord-centric; (3) inherent conflicts of interest issues have not been addressed in any systematic way; (4) and the relationship between landlords and tenants is inherently adversarial. Given these findings, there is a real question about whether the opposing interests of landlords and tenants can be served by the same brokerage firm.

Many tenant representation firms get acquired and absorbed as "tenant-rep" divisions within dual-agency brokerages. At Cresa, we continue to represent tenants exclusively because we feel it is both the cleanest and most effective way to obtain the results our clients expect and deserve. We keep it completely black and white, refusing to operate in the industry's "grey area." We recognize that trust is everything in quality representation and hope that the next time you have a commercial real estate need, you remember this as well, and turn to the largest pure-tenant representation firm in the world. We look forward to building a trusting and long-lasting relationship with you in the near future. Cresa — The Tenant's Advantage.

About Ryan

Ryan Mitchell, Advisor at Cresa San Diego, specializes in assisting companies achieve their business goals as they apply to real estate. He offers tenants a consultative approach to commercial real estate by taking the time to fully understand their unique needs and tailoring transactions to benefit them. Ryan's attention to detail and commitment to minimizing his clients' occupancy costs make him a valuable team member for San Diego companies. Ryan is a graduate of San Diego State University.

About Cresa

As the world's largest corporate real estate advisory firm exclusively representing tenants, Cresa specializes in the delivery of fully integrated real estate services, including: Transaction Management, Project Management, Strategic Services, Corporate Solutions, Site Selection, Lease Administration, Capital Markets, Mission Critical Solutions, Relocation Management, and Facilities Management. For more information, visit www.cresa.com.

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Cresa

Company Website

11230 El Camino Real Ste., 110
San Diego, CA 92130

Cresa Executive(s):

Russ Sande

  • Managing Principal

Glenn Friedrich

  • Managing Principal

Don Mitchell

  • Managing Principal