What Do Out of Town Buyers Know About New Haven That We Don't?

Investment property is hot these days--that's hardly a secret.  What is surprising is how many of the buyers are coming from somewhere else.  Even when the buyers are local, the money may be coming from another part of the country, or even the world.  Why is that happening?

Our real estate prices have been languishing in Connecticut.  Our economy has lagged behind other areas.  Even the new Governor of Virginia exhorted that Virginia should not become Connecticut in terms of job creation.  Jobs, businesses, attitude toward business, taxes--all of these things can change. What can't change is the amount of land, or its location.  That classic real estate valuation phrase--location, location, location--has never been truer than when applied to property in Connecticut.  Nestled between two huge metro areas, it only makes sense that the value of what is here would rise as prices skyrocket in Metro NYC and Metro Boston.  

Wouldn't it be a shame if the benefit of a run-up in prices in our region went to people from out of town?  Sometimes we are more negative about our area than others are, and it's likely that this is one of those occasions.  Given everything we know about the future of work, the need for a skilled workforce (where Connecticut excels), and the positivity toward business shown by the present State administration, our  future fortunes look bright.  And we should jump on them before others do.

Commercial Deals in Connecticut Are Going Forward

COVID's effect on real estate was a hot topic early in the pandemic, but the residential market clearly took off.  A combination of increased saving, low interest rates, high household formation, and desire for more space for working and distancing added up to strong demand, while lack of supply fueled the increase in prices that followed.  Although there was a dip here in the second quarter of 2020, the rest of the year, and most of this year so far, have been good ones for the industry.

But what of commercial real estate?  Uncertainly is always a huge factor in that sector, and nothing could have been more uncertain than the length and severity of the public health crisis.  While office space has continued to languish in many places, research facilities and health care needs have boomed. Distribution was already a robust area, and the pandemic caused more and more home delivery, leading to greater demand for distribution footage.

In Connecticut's cities, the increase in population has led to the building of additional rental apartments, particularly in the luxury market, and they have continued to lease well.  The latest census shows a shift from suburbs to cities over the State, with New Haven out in front.  

Homeowners and tenants always lead to more demand for retail, and, despite lockdowns and closings, this year has been no exception.  Only lack of staff has limited restaurant growth.  The most surprising fact is the desire for more retail grocery stores.  Even though people have been wanting, and waiting, to eat out, they apparently are cooking more as well.  Fairfield County especially seems to be seeing a great deal of transactions in premium stores.

If the last two years have taught us anything, they've taught us that it's hard to predict the future.  Yet, throughout it all, real estate has carved out a healthy growth rate and popularity.  And that bodes well for Connecticut's next decade.

The Future of Office Space in Greater New Haven

 Much has been written about the terrible effects of the pandemic on occupancy rates in major cities.  Although New Haven is a smaller city, it has reasons to hope that office space locally will not take the big hits predicted in other areas.

First of all, we don't have the same supply.  We haven't been adding to the number of office buildings the way other regions have done.  In fact, we've been taking office and turning it into residential in several cases.  Low supply always pushes up occupancy rates.

Secondly, we have been adding residential units, both condo and particularly rentals, at a fast clip over the past decade.  Luxury buildings have all filled faster than expected, and sometimes it seems that there is an unending demand.  Although some tenants commute to other cities, preferring New Haven as a place to live, most people are working or going to school here.  As that continues, it leads to a greater need for commercial space, even offices.  Obviously, it helps retail, restaurants, and service uses, but it has long been known that people try to work where they want to live.

Thirdly, our uses for office space don't line up exactly with most urban locations.  Yale is a large tenant, in addition to owning millions of square feet of space.  Biotech is a greater percentage of the for-profit sector than in most other cities, and the need for lab space and intensive collaboration means that employees can't do much of their work from home.  Those factors won't change, and that will help us fill more office/flex space going forward.

Finally, COVID has pushed many to move from dense locations to ones with more open space.  Smaller cities are thriving, and may outpace larger ones over the next few years.  New Haven, with its desirable location between NYC and Boston, may well be one that does exceptionally well.  And we're on board with that!

Commercial Real Estate Lags Nine Months to a Year After Residential

We all know that real estate sales go in cycles.  Buying at the top is expensive.  Buying at the bottom is lucky, but usually only known in arrears.  What we should think about now is this:  Commercial real estate activity usually follows residential patterns, but nine months to a year later.  So what do we know about the housing market in Connecticut now?  It's hot, hot, hot. And what does that tell you about waiting longer to purchase commercial space?  Do not, not, not! 

This is the time to lock in real estate, before a booming surge in new homeowners leads to a need for other kinds of real estate.  All those buyers will need furniture, cars, food, tools, and other things that come along with a new lifestyle or location.  We already know that restaurants and other entertainment locales are just waiting for spring and summer patrons.  But what about everything else that they haven't bought during the past year?  While it's true that ecommerce has filled a big part of people's needs, there will still be an uptick in bricks and mortar for all kinds of purposes.  

If the second Roaring 20s are going to hit us soon, why not position yourself to make money just through foresight?  Buy now, and reap the rewards as the economy recovers from the pandemic.  Your investment portfolio will thank you later, if you fill it with some commercial real estate now.

Pop-Up Real Estate

 We know that office space is now offered in co-working spaces, with shared amenities.  Both VRBO and Airbnb are the same concept for residential living.  While we have seen pop-up restaurants and other retail in cities, it seems to be a concept that may evolve further.

Once the population of the US begins to approach herd immunity with vaccinations, states and cities will ease restrictions.  Many people want to be in a restaurant, but there will still be occupancy limits in many places.  To fulfill that demand, and the demand for other retail, we may see a lot more shared space.  So not only pop-ups in empty spaces, but shared spaces.

We've seen that work in churches, where congregations will share one building, and hold services in the same sanctuary at different times.  Why not the same in restaurants?  Beauty salons?  Entertainment venues?  Retail generally?  Landlords may become a lot more flexible, and entrepreneurs who have been waiting for the economy to open up may be able to ply their wares with less risk that way.  It makes sense, especially for anything where there are fixed costs of operation and equipment, so that use by more than one owner will cut down the overhead.

How about a brunch pop-up in a restaurant only open for dinner?  How about a family cafe in a neighborhood watering hole?  This would require cities and states to be flexible about use of space with liquor permits, for example, but would help urban areas to be more trafficked at all times of the day.  What about food carts and beer carts on weekend nights in dog parks or parking lots?  

As we all wait for life to return to normal, let's stop and think how the future could be even better than normal.  

Smaller Cities Are All the Rage

New Haven has been billing itself for years as the GSCIA (Greatest Small City in America).  Now that there is a burgeoning population of both workforce members and retirees moving from big cities to smaller ones, that seems to put New Haven in a great position.  We have the elements that people look for---education, excellent health care, recreational possibilities, and affordable housing.  That last criterion slipped a little this week, as the list of the fastest home price appreciation in metro areas listed New Haven as number 11.  And Bridgeport was number one!  Some of that comes from the fact that our prices were so low for so long, as our recession values persisted for many years after other places pulled out of the recession doldrums.  It’s obvious that a lower base produces higher incremental percentages.

It looks as though our time has come!  Millennials desiring open space, retirees needing superior hospitals, and people fleeing the denseness of big cities have all been considering these moves.  We are a smaller version of Austin, Texas, perhaps the hottest destination going right now, with two larger cities on either side.  While we don’t have quite the economic base that Austin is building, or a State Capitol (or, let’s face it, the climate), we still have a lot to offer.  Investors and entrepreneurs should be scouring our region for opportunities, while prices continue to rise and rates remain low.  All the signals from the Biden administration point to increased economic stimuli in the months to come, and this is a perfect place to take advantage of that funding.  People have been hunkering down, paying off debt, and staying home.  Once we are all vaccinated, there should be a boom in all types of commerce.

If you haven’t jumped on this bandwagon already, don’t miss out.  If you are a seller, now is the time to offer your property. If you are a buyer, the best is yet to come.

What Will the Biden Administration Bring to Commercial Real Estate?

 We've been through four years with a real estate owner and investor as our President, and we are about to transition to a very different administration.  Whatever we thought of President Trump, many in the field thought that he would help us, and, in some ways, he did.  Now we are moving forward with another team, and the jury is out.  What should we expect?

While taxes will likely rise, it won't be instantly.  It also may well focus more on income in general, and not on the type of income that you have, meaning that real estate would not be targeted.  Would we expect that business meals will continue to enjoy complete deductibility?  I'd guess not.  That may help us slightly now, but removing it isn't aimed at real estate, and it won't be a big surprise.  

Some of the tax advantages that real estate has had are pretty obscure for the population as a whole, and maybe even for Congress.  Are there enough 1031 exchanges to have a focus on eliminating them, or tightening the rules?  Again, probably not.  

What could help us?  First of all, interest rates.  There are signals that they won't be increasing any time soon, and that helps real estate more than anything else could ever do.  After all, it's the payments that matter, more than the price.  

Biden will also be helping those who have been impacted by the pandemic, and they have to live somewhere.  It seems plausible that rental properties will do very well in the upcoming year, and that tenants will get enough help to be able to afford the rents.  This may be particularly true in Connecticut, as a blue state.  We have been at the bottom of the list for so much federal aid in recent years, and the new administration should change that.  Cities may benefit, which is where the bulk of renters live.  

Once we achieve herd immunity from COVID-19, or when a majority of the population receives the vaccine, there should be a big upswing in retail, restaurant, and entertainment activity.  In fact, it may well exceed the norm for some period of time, as people revel in getting out and doing things.  Travel will help hotels, as well as the other categories listed above.

All in all, it's a new day, and one that savvy investors will use to determine where to place money.  More of us may switch from stocks to real estate, and those who have moved to Connecticut for the open space will often stay, and spend money here.  Prices for real estate will continue to rise, and only supply will limit growth.  Since there is more supply on the commercial side, that's even better news for investment property owners.  

Happy New Year!

Start Ups are Starting Up All Over

 There are three primary motivations fueling the current boom in start ups.  One is that many people have left, by choice or otherwise, their employment elsewhere, and are following their dreams into their own businesses.  The second is the availability of cheap capital, with banks looking for loans, The third is the real wild card, because most of us can't remember an earlier pandemic.  The health crisis over COVID is spurring entrepreneurs to look for solutions to new problems, or to fulfill needs that aren't being met currently, such as with PPE.  

These three reasons have combined to make this year, despite all of its terrible downsides, a fertile one for new ventures.  There has never been a greater need for people to look outside the box for answers, and smart businesspeople everywhere are capitalizing on that need.  It usually also means that those same risk takers will also think differently about commercial real estate.

In the recent past, we've seen other trends, such as the repurposing of old industrial buildings and schools for residential or commercial use, or the rise of "green" as the ultimate amenity.  To court millennials, landlords have developed more open space, more areas for socializing and recreation, and paired food and drink with workplaces.  One residential landlord told me recently that he has a dog washing station at his newest project, a nod to the proclivity of millennials to have pets in urban areas.  

What will the COVID crisis bring us in innovative trends?  Maybe shared space that's shared by day, by time of day, or even by season.  Perhaps there will be more and better use of stairwells, to cut down on elevators, and probably different eating options (more picnic areas outside, fewer cafeterias).  Outside heaters and fire pits will definitely feature in chic workplaces.  Cleaning processes will become big factors in rental choices. 

What should landlords do?  Maybe begin by thinking more favorably about start ups, looking more at the people involved, and less at the company history.  Be more willing to consider drastic or unusual changes in floor pattern or layout.  What about putting the gym next to a garage door of a sort, where a whole wall opens to the outside?  Or a year-round pool, heated with geothermal energy?  It may be that shorter leases with more options for extra space or an early exit are entertained. 

If this year has taught us anything, it's that no one knows what the future will bring.  Remember that fortune favors the brave!

Old Real Estate Maxim Still Rules

 When I was in business school, now decades(!) ago, I had a professor whose current work then was focused on how CEOs decide where to locate company headquarters.  His conclusion, after much research, was that the biggest factor in choosing a location was where the CEO him/herself wanted to live.  

While that isn't a shocking result, it is a little surprising that big organizations, with all kinds of considerations for transportation, labor force, infrastructure, taxes, and a myriad of other factors, would in the end have personal preference of one person as the greatest determinant.  We can see evidence of this still, in the recent behaviors of business executives during the pandemic.

Connecticut has been the beneficiary of a move out of New York City, and thousands of people have moved here in the past six months.  Yet we didn't expect that companies themselves would move, and that's turning out to be the case.  And that isn't just in the office arena--manufacturers and other seemingly less mobile property users are also in the mix.

We are getting showing requests and offers from buyers out of state, who are looking to locate where they plan to live.  There are many reasons for their choices, but it points to a brighter future for Connecticut than was predicted while tax policy and weather was causing a rush to warmer climates and distant vistas.  Now, the proximity to major metropolitan areas, combined with family dynamics, is helping us catch us with the economic progress made by other areas over the past two decades.

There are good reasons for this to continue.  Our location between Boston and NYC is obviously key.  Company owners and investors don't necessarily have to live here, but they will have employees and tenants who do.  Many family business owners also want to be where their children and grandchildren are, whether or not those generations are in the company or not.  The current focus on low density and outdoor space work in our favor, and our natural assets have become more important to real estate decisions.

Looking forward, we can see from the residential market that supply may become a limiting factor.  While none of us expected it, this uncertain age has become one of increased real estate activity, and a good time for sellers to consider putting properties on the market.  Who knew that the old research about company location would be so relevant now?

What Shape Will the Recovery Curve Take for Commercial Real Estate?

This is a somewhat misleading headline, since I am neither a professional economist, nor a seer.  The point I want to make, however, is that there is much more activity than there was after the abrupt economic debacle of 1987, or during the Great Recession of the late "Aughts".  In those two prior times, all interest in viewing real estate, or in buying or renting it, went on hold as soon as the stock market collapsed.  It took many years, in each case, to revive demand, or begin to create supply.

Right now, we are seeing strong activity in the industrial market, as well as demand in investment real estate continuing along.  Retail and traditional office buildings have clearly been harder hit, so it will take longer to see what happens in those sectors.  The fact that sales and leases are occurring, however, shows that this recovery won't be as delayed as the other two.  It may not mean that prices stay up, although we haven't seen that problem yet.  

One big factor is that some parts of the national economy, led by ecommerce, and followed closely by PPE manufacturers, have every reason to be expanding.  The pandemic part of this crisis, leaving the economic issues aside, have created opportunities for new businesses and expanded services.  Some of the current trends seem likely to persist, even if the country completely opens up by the end of the summer.  While things could certainly shift for a number of reasons, nimble entrepreneurs and corporate leaders are moving quickly to fill demand. 

The intervention of the government in the early stages may also mean that banks are more inclined to lend.  The relief provided so far gives financing firms more assurance that they will eventually get paid.  That wasn't true in the last recession, and it was recent enough that we seem to be remembering those lessons.  

Let's hope that I'm right, and that we see strong sales and leasing as restrictions lift.  Given our large role in the overall economy, that would be good news for everyone.

Don't Write Off December

Although the year is drawing to a close, the real estate season isn't over.  Many people figure that holidays and vacations mean that nothing to do with property will get done, but that isn't always so.  In fact, because the end of the year is a hard deadline for some projects, professionals often rush to make sure that transactions are completed in time.  Delays are made up for by planning for them.  And lots of people in the industry wait until January to take a break.

Even clients can be easier to reach.  Especially this year, when Thanksgiving was so late, the season is rushing toward us, and business travel slows down.  Weather keeps some from traveling, or even from regular appointments.  When businesspeople are in the office, they sometimes have less punishing schedules.  Things they need to get done can depend on others, who are not around. Financial chores and future planning take place onsite, in many cases, as do reviews and strategic sessions. Even shopping is now online for lots of gift givers. As a result of all this, it can be more possible to reach people at their desks, not less.  And they may be more likely to answer their own phones, due to clerical absences!

What does this mean for buyers and sellers?  Push to get things done, even in the last weeks of the  year.  Try a little harder to find common ground--expect that there may be more flexibility when time is short.  Put off that shopping list, and get down to business.  You'll be glad you did!

The Amazon Ripple Effect

Now that Amazon's new warehouse is about to open in North Haven, we should focus on the broader effects of its presence.  Although politicians tend to focus on employment, we should also consider the other businesses brought here by Amazon.  We have had two large deals recently, where the buyer chose the location because it was a supplier to Amazon, or provided a service that it would purchase. Investors, developers, and builders, please take note.

Since all of those other organizations employ people as well, plus they pay taxes and buy goods and services, this is very good news for our region. Warehouse space is becoming more desirable, and other companies will build from scratch.  The multiplier effect will be in full force!  Employees will also buy houses, cars, and durable goods, plus eat out, give to charities, and pay taxes.  And that will be good for all of us.

Urgency at Last

Forget the calendar.  We've been smoking hot for the past few months in the Commercial Division.  Beginning in the fourth quarter of 2017, we finally started to see the uptick we've been waiting for over the past few seasons.  December 2017 saw gross commissions that were ten times that of December 2016.  January kept up that trend, with commissions five times over the January of the previous year.  February is also running way ahead.

Even better, we are seeing immediate activity on the kinds of listings we said would move quickly if we could get listings of that type.  For instance, there has long been a shortage of industrial buildings under 20,000 square feet for sale.  The listing we recently posted in East Haven was shown over and over again in the first week, and went under contract almost at once.

All of this is despite January weather that was much worse than what we saw last year.  It was cold, it snowed and was icy a lot, schools were cancelled, and spirits lagged.  Yet real estate moved briskly.  I guess we can officially forget about the old pattern, where sales follow weather patterns.

Now that the stock market has begun to hiccup, we expect even more demand for other investment vehicles.  We have already seen investors coming from NYC and other places, looking to place cash into something safer, or at least cheaper.  That out-of-state interest has, in turn, caused local developers and investors to take another look, and also to bid higher, on such properties.  Multifamilies are still in great demand, and we think that will spill over into other types of buildings, and into communities outside of downtown New Haven.

If this is our market when it's dark and cold outside, we can't wait for spring!

Set a New Deadline

We are just coming off of what turned out to be a very busy December.  There were lots of changes, of course, with the new Federal tax bill, but it was--and still is--very unclear as to whether some things should have been done last year, or will be more advantageous to do in 2018,  Nowhere is that more true than in the real estate realm.

So, while uncertainty generally slows a process down, last month it sped up.  When I tried to think of why that would be, I realized that the end of a calendar year is a powerful and motivating deadline.  All sorts of people rush to finish projects and clear off their to-do lists before a year ends.  This year, despite all the potential changes, was no different, and even busier.

It made me conscious of the fact that the real estate market has been slowed down by people feeling that there was no pressure to make decisions.  Instead, they thought that properties would continue to be available, maybe even for less, into the foreseeable future.  Our job as agents was to try to create urgency.  That was often hard.

Therefore, our hope for next year is that all potential and current clients have a self-imposed deadline of some sort.  Whether their hope is to move, sell, or redeploy assets, everyone needs a finish line to cross.  Uncertainty can be problematic, but, if it lasts too long, more is lost by waiting than by simply moving on.

Greater New Haven, or Connecticut as a whole, residential, commercial, or investment, buy, sell, or rent--all are choices.  Just make one, and you will feel accomplished and relieved.

Multifamily Still Strong

Despite talk in the NY area that prices for residential property are overheated, and although Connecticut is considered to be one of the places where buying makes more sense than renting, both have more multifamily properties in the LoopNet weekly report of the most viewed properties.  In the NYC region, 7 out of 10 of the listings mentioned were multifamily, and 8 of the 10 in CT were in the same category.

What this suggests is that it may be less about demand for the end product, and more about demand for investment properties for mostly smaller investors, at least in Connecticut.  By that, I mean that REITs may be looking at other things, but that much of what would be considered "affordable" purchases for individuals are now falling into the multifamily basket.  It could also mean that sellers are beginning to put those investments up for sale, either to reap the profits to reinvest, or to lock in gains before there is an oversupply.  Or that the stock market is getting the proceeds from any sales.

Under any scenario, it's clear that the action lately is strongest in the investment realm.  Since LoopNet is telling us that buyers are looking largely at those types of listings, it makes it a good time to list. 

Finding What's Not There

Usually, when you are looking for something to purchase, you expect to choose from among the options available, either at a retail outlet, or on line.  Real estate has become very different these days.  There is often a disconnect between what sellers are offering, and what buyers want to buy.  And that's where the agents come in.


In the olden days, we sat down with people, and showed them a physical book of properties available, or took them in our cars to see what was listed.  Now, we've become experts in finding what is not on the market.  We frequently scour an area, or brainstorm together at an office meeting, to try and locate what a buyer or renter is hoping to find.  It's not uncommon for us to chase down leads, or contact out-of-town owners upon seeing a half-empty parking lot or signs of disuse, in order to present more choices to clients. 


That's where the distinct advantage of a local company comes in.  We are big enough to network all over the world, to promote listings on line, and to have the technology necessary to accomplish transactions.  However, because we know Connecticut, and have our whole team of local experts, we can search with purpose, having a good idea of where things not on the market currently may be located, or carved out of a larger property.  In one recent search, only a couple out of almost 20 properties were being marketed for sale or lease.  The others came through networking with owners, agents, State and town officials, and each other.


That's the future of real estate brokerage--agents as consultants--and we are in the vanguard.  We advise people who have found buildings and land, people who are looking, and people who haven't looked.  We seek out alternatives, identify and sometimes eliminate obstacles, and smooth the way with regulations.  It's the best way for us to work--as partners with our clients--and the best way to access our services.  Sometimes change really is good for everybody!

Update on the Tribal Nations' Casino Site

It's been quite a whirlwind here this fall so far. Since the announcement of the choice of Pearce Commercial Real Estate to manage the search for a new casino site in northern Connecticut, we've been all casinos, all the time.  We bought into a very aggressive time frame, as well as a clear sense of having an open, inclusive, and transparent process in which everyone can participate on a fair footing.


We were committed to putting out the RFP by the end of September, and we achieved that goal.  Now we are fielding written inquiries, and posting them, with answers, on an FAQ page.  The responses are due by November 6th, and then the vetting of sites begins. We hope to wrap everything up as soon as possible after that. 


All of us have learned a lot about the gaming industry, and I always love learning new things.  We have enjoyed working with the two tribes, especially in light of the fact that this is a groundbreaking venture--the first time ever that two tribes have come together to build a facility jointly.  It promises to continue to be interesting and challenging, and we will be burning the midnight oil for some weeks to come!

Hartford Being Sold to Out of Town Investors?

Big Hartford office buildings are now such a good deal, per square foot, that they are attracting buyers from out of state, many of whom may have been priced out, or have priced themselves out, of the NYC market.  Since most real estate markets are cyclical, and since office space can obviously be leased for less if it is bought for less, it seems reasonable to think that these investors will realize gains in the medium and long run. 

Will other markets in Connecticut follow?  It also seems sensible to think that, the closer to NYC something is, the more it will eventually be worth.  There is a clear correlation with housing prices, based solely on distance from Manhattan, and it likely holds true for commercial buildings as well.  So will New Haven also see a boom in out-of -town buyers?  That seems already to be happening, and will probably continue.

Moving Chess Pieces

What do restaurants and technology/biotech companies seemingly have in common?  They both seem to abruptly change status.  Restaurants, for obvious reasons, don't ever seem to give a lot of notice about closings, and so closures come as a surprise.  Tech and biotech companies, which are clearly hot properties, merge or move on a dime.  Buildings which have just finished fit-up, or undergone extensive renovations, may suddenly find themselves empty again. The rent cost doesn't amount to enough to factor in heavily to other synergies of moving. 


Lately, we've seen both phenomena in our market.  Long-term, established restaurants have closed, and new lab and office space has re-entered the market.  The latter, particularly, could represent opportunity for investors and users to pick up square footage at a relatively low cost.


Nothing is constant except change!

The Puzzle of Tenant Representation

Some people may wonder why they need a real estate agent to represent them, if there is a sign in front of the building, and space for rent?  One big reason is to help with negotiating the lease.  Leases vary tremendously from property to property, owner to owner, and landlord to landlord.  They can be very confusing.  Sometimes it is even difficult to tell what the actual rental amount is.  Net leases can be called gross leases with "extra rent", expenses for the common areas can be handled very differently from space to space, and expansions, renewals, rights of first refusal, and other options can seem baffling to people who have not done this before, or not done it often.  We even had one client whose lawyer would say "They can agree to this clause now, or I'll hide it somewhere in the lease and get it anyway".  That's what your agent is for--to guide you through all the twists and turns, and give you guidance as to custom and prevailing rates in your area.  As a reminder for those who may not know, the commission for the buyer's agent is most often paid by the landlord under the terms of the lease: although that can certainly vary, it is common for the tenant not to pay for his/her representative.  As a further reminder, the commission is determined by the lease, which is between the landlord and the listing broker; the tenant has nothing to say about it.  That's why it is sometimes surprising to hear that tenants (and buyers) believe that they will pay less if they don't use their own broker. Usually, it just means more for the listing broker, who is then handling both sides of the transaction.  There are many peculiar things about our industry, and they aren't all in our favor.  Most times it really pays to have a tenant representative, or a designated agent within the brokerage firm, advising you, as a tenant, on terms and conditions, as well as on rental rates.