Corporate real estate service (CRES) providers are used generally by businesses whose core business is not commercial property. CRES providers thus don’t provide services to property owners (landlords) or property managers.
This body of players in the commercial real estate (CRE) industry represent the interests of the occupier of properties. Their customer can be either tenants, or owner-occupiers, or both.
CRES providers can be thought of as an outsourced division responsible for all your property decisions and processes.
They are commercial property specialists who, like brokers, have the resources and experience to analyse and process the industry’s massive volumes of data for the benefit of their clients. CRES providers’ objective is to answer whether rentals and expenses are above or below market, which areas are in decline or growing, what qualitative factors are influencing areas, what industry efficiency trends are, what your commercial property risks look like, and how your capital is most effectively deployed.
CRES provides assistance with one or all of the following:
- Transactions
- Lease negotiations relating to renewals, early lease terminations, sub-leasing and reinstatements
- Lease re-gearing
- Owned property disposals – either vanilla or via sale and leaseback
- Due diligence on real estate transactions
- Effective marketing of vacant space
- New site acquisition (leasehold or freehold)
- Development funding procurement and project execution
- Lease management (extending to payment of rentals and related expenses, engagement with council on rates disputes, digitising hard copy documents etc.)
- Property-level analysis and advisory
- Stay versus go analysis
- Lease versus own considerations
- Expense optimisation and property lease value increases through comparison to benchmarks
- Site location suitability / optimisation studies
- Development feasibility studies – from new developments, to capital expenditure on existing assets
- Portfolio level analysis and advisory
- Lease and property audits
- Real estate portfolio assessment, benchmarking and reporting
- Options analysis, strategy formulation and implementation
- Ad hoc research and analysis projects
Who pays CRES providers?
CRES providers are generally paid by the party whose interests they represent – be it the tenant or owner-occupier.
Unlike brokers, CRES providers are generally not paid by the property funds.
The economics nitty-gritty of CRES
Brokers’ commissions, paid by the landlord, are added to the cost of the tenant’s lease rentals, and amortised over the cost of the lease. So, in effect, the tenant pays for the commission.
CRES providers’ advisory fees, paid generally by their client, can be paid upfront or amortised over the period of the lease.
Why does CRES exist?
- Save customers money by reducing rentals and property expenses
- Reduce risk by ensuring property decisions help your business, vs hurt your business
- Untangle the web of commercial property industry complexity
- Save large amounts of executive time
- Allow their clients to focus on their core business
