Ask the Experts: Commercial Real Estate Mistakes

What’s the biggest mistake you see clients make PRIOR to engaging Allegro?

One of the biggest mistakes I see clients make is to approach their real estate situation with a singular, predetermined objective. Specifically, they identify a path — it could be a renewal, new construction, relocation, purchase — and they proceed down that path with this ONE option top of mind. They are “all in” with a single solution and the further they proceed, the more they paint themselves into a corner.

When a client has taken this approach, there are two major problems that routinely present themselves:

1. Failure to consider multiple scenarios and alternative solutions.

If the deal falls through, or if an unexpected challenge arises, they have created a situation with no back-up solution. It’s a terrible position to put themselves in (particularly, because they often have an impending lease expiration) and one that could have easily been avoided.

2. The absence of leverage.

By selecting one option and working singularly to achieve this goal, they have not maximized negotiating leverage. There are not multiple property owners competing for their occupancy and; as a result, they have severely limited their ability to benefit from a competitive marketplace. Without leveraging multiple owners/landlords, it is also challenging to determine if they have negotiated the best deal.

When buying a new car, few rational people would go straight to one dealership, drive a single car, buy it, and leave. Negotiating your real estate deal is no different — you need to see what’s available, test your options, explore fit and features — only then are you able to know that your final decision is the right one.

Going down a one-way road with no outlet leads to dead-end decision-making. When clients do this, invariably they realize that they’ve expended inordinate time and resources, failed to leverage multiple owners/landlords, and/or develop an alternative scenario. Not to mention, by choosing not to engage professional representation for real estate decisions, they have put themselves at risk of being accused of not performing due diligence on a business transaction. For publicly traded companies, following Allegro’s approach of “making a market” for their tenancy would be viewed by their boards and shareholders as exercising sound business judgement.

– Michael Cantor, Managing Director/Principal

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