"Save Money by Skipping a Tenant Rep? You Might Also Want to Try Skydiving Without a Parachute!"

I just got back from the Tennessee State Real Estate Fall Conference, and all anyone could talk about was the National Association of Realtors (NAR) settlement and the whole mess around buyer representation. Basically, in residential real estate, the debate is swirling: why pay for a buyer’s agent when you might be able to go it alone? And trust me, this got me thinking—how many retailers are asking the same thing about tenant representation?

In commercial real estate (CRE), we've always played by the rule that commissions are negotiable, and brokers earn their keep by being a valuable part of the transaction. Before you cut that commission check, you might be wondering, "What exactly am I paying for?" National retailers already know the value of tenant reps—they've been using them for years to nail down profitable locations. But for local retailers, the conversation often goes a little something like this:

"Why do I need a tenant representative? I know my market. I know where my customers are. And besides, wouldn’t hiring a rep just increase my costs?"

Sure, but retail is a whole different beast. The goal isn’t always to find the cheapest rent but the location that will bring in the highest sales relative to your overall costs. It’s about profitability, not penny-pinching. And to make that happen, having a tenant rep is like having a co-pilot who helps you navigate the turbulent skies of leasing deals.

"Do I Really Need a Tenant Rep? Or Am I Just Trying to Make Things Harder?"

Before you dismiss the idea, here are a few questions to ask yourself:

1. Do you have the time, energy, and sheer willpower to scour the market for every potential location—including the ones not officially listed?
2. Do you know the market’s true effective rental rates? (No, I’m not talking about the sticker price; I mean the real rent after negotiations.)
3. Do you really want to spend your day haggling with brokers and landlords when you could be running your business instead?
4. Are you aware that quoted rents typically already have a brokerage fee baked in? (So technically, you’re paying for representation whether you use one or not.)
5. If your new location tanks, do you have an exit strategy—or just a plan to panic?

Now, I get it: most local retailers don’t use tenant reps. But let’s talk about what you’re missing out on if you go solo.

"What Does a Tenant Rep Bring to the Table? Glad You Asked."

1. Time

Finding the perfect spot takes more than driving around and looking for “For Lease” signs. A tenant rep brings up-to-date market data, including demographics and psychographics, and they might even know about spaces before they officially hit the market.

2. Money

It’s not just about saving you money on rent. A good tenant rep can squeeze out more in tenant improvement allowances, free rent, and the small stuff that adds up—like caps on controllable expenses or favorable renewal options.

3. Profitability

What’s more important to you: low rent or high profit? A tenant rep optimizes your retail location for profitability, not just the cheapest square footage.

4. Financial Analysis

Rent is just the tip of the iceberg. You also have to account for tenant improvements, maintenance fees, taxes, utilities, insurance, and construction costs. A tenant rep makes sure you know the full financial picture.

5. Navigation

From the letter of intent to the day you open your doors, the leasing process is a minefield. The decisions you make today will stick with you for the life of the lease. A tenant rep helps you dodge those mines and avoid costly mistakes.

6. Leverage

Knowledge is power. The more data and expertise you bring to the table, the better your deal. That’s what creates leverage. And leverage helps you mitigate risk. (Remember: risky is fun when you're on a roller coaster, not when you're negotiating lease terms.)

7. Connections

The right tenant rep knows the brokerage and landlord community inside and out. This means access to spaces and opportunities you wouldn’t find on your own.

8. Facilitation

Sometimes you need a voice of reason, someone who can break down market conditions, play the bad cop with the landlord, or settle disputes. Your tenant rep handles that so you can keep your landlord relationship intact.

9. Full-on Focus

A tenant rep works 100% on your behalf, no split loyalties. They’re invested in your success because that’s how they succeed too.

"Why Retail Landlords Appreciate Tenant Reps"

Believe it or not, many of the best retail landlords prefer tenants who’ve been prepped by a savvy tenant rep. That’s because they know those tenants understand market conditions and the leasing process, which makes for a smoother deal for everyone.

"Bottom Line: Don’t Go to Court Without a Lawyer. Don’t Lease Without a Tenant Rep."

Look, no one in their right mind would walk into court without a lawyer, or face an IRS audit without an accountant. So why, when signing a lease—a decision that will affect your bottom line for years—would you go in without an expert at your side?

Hiring a tenant rep isn’t an unnecessary cost. It’s an investment in your business’s future profitability, stability, and success. Going it alone may save a few bucks upfront, but in the long run? It could cost you a fortune.

Shawn Massey is an adjunct professor at The University of Memphis where he teaches a graduate class in real estate development and undergraduate/graduate in real estate investment. When he is not teaching, he is a full-time retail real estate advisor with TSCG. He holds the following designations CCIM, ALC through the National Association of Realtors and CRRP, CLS, SCLS designations through ICSC. To contact Shawn Massey please call (901) 461-7070 or via email at [email protected]