Expert Insight: Buyer Brokerage And Tenant Representation
Doug Finlay of NAI Peninsula has over 30 years of experience in commercial real estate (CRE) in Ontario, Canada. His career path started in commercial construction, in the field. He then had a life-changing interview with a design-build contractor who spotted his potential and gave him the chance to explore more options and said “Here’s your desk, see where you fit in”. Doug says “After several months of trying my hand at estimating, then project managing small contracts, I found my natural niche – business development and contract negotiation. I ended up selling design-build construction projects for this fast-growing company…”
Thereafter, Doug ran his own design-build consulting practice while his contacts in the CRE and economic development worlds grew and grew. “My background was well-suited to make the transition to CRE – which I did in 1990.”. When Buyer Representation was introduced into law in Ontario in the 90s, Doug’s innate sense of fair play led him to “jump on it”.
“Although it wasn’t broadly recognized by clients in those early days, I’ve practiced buyer/tenant representation increasingly over the past 25+ years throughout Ontario”.
A champion for buyers
Tenants and buyers need to understand that their interests are “protected and championed under the buyer and tenant rep approach”, Doug says, “every bit as much as the sellers and landlords are on the other side”. Understanding this should assure clients that they can “openly share their real needs and expectations” which will mean “efficient and accurate searches and acquisitions”.
He continues: “It’s about genuine advocacy for the client. Buyer and tenant reps have to see themselves as the client – or at least as a business partner with the client – not the mid-point between the client and the seller/landlord.”
Define your needs
In addition to finding a broker who will be their champion, Doug says tenants and buyers must think about what type of property they want and what area makes the most sense. A good representative can advise if a jurisdiction offers special incentives or other value-adds, if the labor pool is the right fit, or the transport infrastructure suits.
“In other words, there are many macro factors that potentially have as much (or more) impact on the success of the client’s business as a specific property does by itself,” he says.
Given this, Doug believes that a successful broker today needs to master a plethora of skills. If pushed, his top three would be active listening, negotiation prowess, and being a “specialized generalist”. The latter, he says, “is actually not an oxymoron”. A traditional broker will focus on one sphere, such as land, industrial, office, or multi-unit residential. A specialized generalist has to “be able to effectively find, weigh and distill the macro-level factors right down to a specific property in a specific location for the client” across multiple regions and sectors.
“With Ontario’s population of 15 million spread over a land mass 50% larger than Texas, there are a lot of jurisdictions to be explored and vetted; each with different dynamics and attributes, as well as incentive programs that come and go over time. It takes considerable skill and experience to know how to look, where to look, and what to do with what you find.”
Top deals in Ontario
We asked Doug to tell us about some recent “top deals” in Ontario, deals that show the value of the kind of approach he advocates. “For starters,” he said, “here are two deals that illustrate first tenant representation, and then one more for buyer brokerage…”
- Our Tenant client was a large solar panel manufacturer. Our mandate – before looking for specific properties – was to first research competitive jurisdictions within southern Ontario. But this client had to work with government-imposed criteria pertaining to Canadian content in their design and manufacturing process (it must be at least 60%). So, in addition to the usual comparison of various incentives, we had to bear in mind where the client’s key suppliers and customers were located. An otherwise perfect building on a perfect property in the best jurisdiction would be the wrong pick if it negated the 60% content criterion because some key service or supplier wasn’t able or willing to work in that particular market. In the end, we brought them to Guelph Ontario in a 150,000 SF building to which the landlord added another 90,000 SF.
- The client was in the CBD oil business, an innocuous nutraceutical cannabis by-product. The cannabis industry in Canada is still very new with plenty of confusion and misunderstanding about various cannabis products, and therefore lots of opposition and push-back from municipalities and neighborhoods. Also, the bylaws and zoning requirements were changing almost monthly. In the end, we found success by taking the client out of the Greater Toronto Area (GTA) to a remote property in Bancroft, a small northern community that previously enjoyed a flourishing wood production operation that had subsequently closed. The community was eager for new business; there were very few immediate neighbors, and very little opposition. In addition, there were natural water springs with enormous capacity that could be tapped for this water-intensive process. My buyer ended up with a 175,000 SF building on a 134-acre property and was warmly welcomed by the municipality.
- Finally, I placed numerous senior home developments throughout Ontario over many years. My developer client had certain minimum criteria. For example, they wanted a minimum population base of 60,000 to justify building a retirement home. However, when I probed deeply to understand how they came up with that population number, it became clear that they were looking at traditional towns and cities in metropolitan areas. Once I understood that, I pitched a property in a small city of 40,000. I showed how it had a very large catchment area of all the surrounding countryside where all the farmers lived. To them, this city, Woodstock Ontario was “the city”. It was where they all shopped, went to church, had family, and where they expected to retire. Long story short – we did a very successful deal there a few blocks from a brand-new hospital.
Advice for newbies
Lastly, Doug kindly shared his advice to those just starting out in CRE: “My advice would be first and foremost to be part of an organization like NAI Global. Seriously – it’s so important to be connected with others in the industry doing the same things. The expertise that’s available in such an organization could take years to learn on your own. The CRE industry is becoming more professional and other people are more than helpful for success – they’re essential.”
[Editor’s note: we promise we didn’t even put him up to singing our praises, but of course, we wholeheartedly agree in the power of the network we have grown here at NAI Global]