Dynamics of a Deal Are Altering

CHICAGO-Panelists during the seventh annual RealShare Chicago earlier this week told attendees the dynamics of deals are changing drastically. Brokers need to spend more time on each deal. “We’re doing much more hand holding,” said Vicki Noonan, managing director and director of leasing Midwest region for Tishman Speyer.

“You have to do so much more homework, I think it’s essential,” said Steve Stratton, managing director of Midwest tenant representation for Jones Lang LaSalle. Users are looking to reduce costs and preserve capital. As part of this, tenants aren’t looking to put more capital into building improvements. To help clients, industry experts have become better listeners sitting with clients to go over exactly the specific needs.

Part of the changing deal dynamic is that less and less deals are based on lease expirations and more are focusing on blend and extend. Additionally, it is taking longer for deals to get done. Noonan said it is taking longer for lenders to complete their end of the transaction.

Honesty and transparency were the key words for all the panelists. They agreed that for every interaction it’s best for clients to be upfront, especially when it comes to dealing with lenders. Richard Blum, executive vice president and CFO for the Fifield Cos. said this is especially crucial for owners who made any purchases between 2003 and 2005. “They can’t help but be in trouble.”

Noonan agreed. She said when sitting down with a client one of the first questions she now asks is “where are we with credit.” And despite clients being initially taken aback by the bold question, it’s a necessary early question and just one more example of how the deal-making dynamics are taking on a whole new appearance.