Would you challenge a golf pro to a match for $1.4 million dollars?
Jan 15, 2018
When I first got into commercial real estate, I worked as a listing agent for a major landlord. I enjoyed negotiating and the creativity associated with securing good tenants for our buildings. By my second year and after dozens of transactions, I had learned how to effectively negotiate and leverage the sophisticated financial programs and resources we had to optimize returns. Before long, I was regularly meeting and exceeding our budgets and creating millions of dollars of wealth for the publicly traded company that owned our properties.
Often, I would deal with people who called the leasing sign directly - whereby we would start putting together terms for a lease. Many would ask my opinion and expressed a desire for me to help them get a “good deal”. However, my contract was with the landlord ... so my objective (and obligation) was to procure higher rents and advantageous deal terms for the property owners. This included the 20 or so key functional elements that heavily skewed the lease in our favour. I found that in the vast majority of situations I dealt with, the tenant wound up signing a “poor” lease whereby they failed to appreciate the risk, the complexity or how quickly small rent differences can add up over the lease term. Against our expertise and full time resources, most didn't stand a chance... much like a part time recreational golfer challenging the golf pro to a match for big money.
Sometimes, we also engaged in “dual agency” – whereby my brokerage agreed to represent both tenants and landlords in order to generate higher real estate commissions and push the façade of a “balanced deal”. While our commissions were bigger, we simply wound up being a mediator and working for neither party. In these scenarios, the tenant still did poorly as we weren’t about to sacrifice lucrative landlord relationships / listings (which accounted for most of our fees) for one tenant. In essence, our company and industry allowed us to become the representative for both the plaintiffs and the defendant in the same court of law - whereby the defendants/tenants were losing almost every time. Sure, the bigger commissions helped ease the conscience but it just didn’t seem right.
I’m not sure if it was one particular transaction, but personally getting to know many of the tenants and small businesses that secured space in our buildings - got me thinking. What if we worked purely on behalf of tenants? What if we put together the same information, lease acumen and financial programs utilized by major landlords and applied those resources and expertise to help tenants secure more balanced leases?
That was the basis for founding the Orange Group. Most companies deal with their lease(s) only once every 5 or 10 years and the odds are not high of obtaining good deals against an agent or landlord where it is their primary profession. We believe that the best tenant leases are generated by an expert without conflicts of interest or influence by commissions. We believe in transparency of fees and how those are amortized. We believe in providing tenants with high level financial lease analysis, real estate expertise and favourable lease terms. We know that the average Canadian commercial tenant pays more than $1.4 million dollars during their lease term and benefit greatly from an expert advocate – even if we save them only 5%. We believe in levelling the playing field and providing the highest caliber of real estate services available to tenants in Canada. Since forming the Orange Group over 15 years ago, more than ever we remain dedicated to helping commercial tenants.