Truth, justice and the tenant’s way!

Many commercial real estate lease arrangements are heavily weighted in favour of the landlordI was browsing through some blogs and online articles about commercial property leasing in the United States and it dawned on me (not for the first time!) how limited our systems in New Zealand are for tenant representation.

In the USA, Australia and other countries it is very much the norm that both landlords and tenants alike have their interests independently represented.

In New Zealand today, we still very much have an industry where the interests and rights of commercial property owners (landlords) rule. And those on the tenant side tend to work it out as they go along.

A quick search turned up many organisations across the US providing a range of commercial property services including tenant representation, such as this example.

What really strikes me is that our system in New Zealand is not at all just.

The reality is that many commercial real estate lease arrangements are heavily weighted in favour of the landlord. They have the muscle, the agency support, the consultancy support, and teams specialising in wrangling the best deals possible out of tenants.

For the most part, as we are predominately a country of small to medium sized businesses, most commercial property tenants have to make do with haphazard support from their lawyer or accountant, neither of whom may have a particularly detailed knowledge of the market. They do the best they can, but there is little specialisation.

Some tenants even rely on commercial real estate agents, who of course are aligned with and paid by the landlord.

I wonder if it is time we catch up with the rest of the world and develop specific tenancy representation services, such as this one in the USA.

Internationally, organisations offer specific and discrete services to tenants and landlords alike, they are distinct and separate.

Interestingly there are international real estate agencies that separate out their services for property owners and tenants in other markets but not in New Zealand.

I advocate the setting of industry standards, regulations and a code of ethics in New Zealand to ensure there is proper and equitable support for commercial tenant and landlord alike. So the playing field is even.

As we slowly lift ourselves out of recession, it is a good time to think about a new way of doing business for commercial property leases, so landlords and tenants alike can do good business, make deals that work for both, and help lift the economy.

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