Sage Offers Tenant Reps

Sage Partners of Fayetteville brings big-city experience to Northwest Arkansas tenant representation market.

The firm, which was formed in April by managing partners Tommy Van Zandt and Brian Shaw, has found real estate solutions for tenants such as Nestl?©, Sony Corp. and Shell Oil Co.

The firm also offers development and investment consulting, and land and income property brokerage, although tenant representation is one of the firms main focuses, Van Zandt said.

Marshall Saviers, a broker with Sage Partners, moved to the area from Dallas in 2004 and is leading the charge on tenant representation with the company.

Saviers said its sometimes hard for people to understand what a tenant representative does. The landlord pays the tenant rep a market commission for bringing the tenant to the property. The rate varies.

Saviers said depending on market conditions, the difference between the contract price and asking price could be as much as 20 percent.

Both Saviers and Van Zandt came from the same firm in Dallas, Transwestern Commercial Services, which has 22 offices nationwide and 1,100 employees.

Van Zandt and Shaw had a minority interest in the Northwest Arkansas division of Little Rocks Irwin & Saviers, which announced on March 7 that it would dissolve. Jim Irwin and Mark Saviers were its owners.

Mark Saviers recently joined Sage Partners.

Marshall Saviers said Sage gets referrals from larger national firms like Cushman & Wakefield and Staubach Co.

Weve done business with them in Dallas, Denver [etc.] so they know our processes are similar, Van Zandt said. They know that if they work with us, their client will be represented appropriately.

Van Zandt has been in the commercial real estate industry for more than 20 years. He came to Northwest Arkansas from Dallas in 2000.

Shaw came to Northwest Arkansas in 1997 after five years in commercial real estate in Denver.

Marshall Saviers said it wasnt uncommon in Dallas to have 15 companies competing for the same piece of tenant representation.

Of course, you are dealing with companies that might be looking for 50,000-SF of office space, so you are dealing on a lot bigger scale, Marshall Saviers said.

Riis Christensen, managing director of tenant services for Transwestern Commercial Services in Dallas, said market experience accounts for 10 to 20 percent of the success equation.

Christensen, who has been in the industry 20-plus years, said experience in lease negotiations can mean everything.

In any commercial office lease, there are about 100 different moving parts that can come up and burn a tenant, Christensen said. The same thing is true for a tenant that is having a building built for them. There are a lot of potential pitfalls.

Marshall Saviers said after a certian number of compleed deals, its easier to figure out the hot and cold buttons in a market.

Van Zandt said most public companies have their own third parties to represent them in the negotiation of any real estate transaction.

Its like seeking an attorney or residential real estate agent to represent you, Van Zandt said. So obviously we have so many of the Fortune 500 companies here now that they are requiring tenant representation.

Shaw said the Northwest Arkansas market for office space is just getting to the point where it will enter cyclical ups and downs.

Having someone who understands those highs and lows will result in a better lease negotiation for the client, Shaw said.

Many times the asking rate in Northwest Arkansas is a very good rate, said David Erstine, a broker with Sage Partners. So the initial terms might not need as much negotiation.

Erstine said there is about 4.7 million SF of class A and class B office space here. In comparison, Dallas has about 206 million SF.

Erstine said the definition of class A and B office space has evolved in the last two to three years because of new construction.

He said what used to be defined as class A then, could actually be class B now.

Erstine is also the vice president of Real Estate Market Data Inc., which produces The Reed Report. He said the report indicates some new buildings have stayed completely vacant for more than a year.

There were seven first generation buildings, meaning buildings delivered to the market with no tenants, at the end of 2004, Erstine said.

Van Zandt said the landlords who will win in the long run will be the ones who understand the market.

He said the problem is that demand for space is steady, but supply continues to increase.

The market is going to decide really quickly where a product is going to settle price-wise, Van Zandt said.

Saviers said buyers will eventually start seeing more variations in negotiations.

With more competition and more development happening here and more supply coming onto the table, you will probably see more of a difference in the asking and negotiated rate because the competition is going to force landlords to become more aggressive, Marshall Saviers said.

Some locations will remain static, Van Zandt said.

There are some properties with their locations and amenity packages and services that are high in demand that will actually be able to increase their rates during a time of imbalance of supply and demand, Van Zandt said.

A landlord with less demand one-half mile away might have to offer concessions to attract tenants for whatever reason, he said.

For example, that landlord might not have as many services or may be at a less desirable location.

Weve got four seperate towns in Northwest Arkansas and each has locational preferences, Van Zandt said. There are certain submarkets within the area that are going to get different levels of growth.