Why Representation Structure Matters for Tenants Making High-Stakes Decisions

Commercial real estate decisions carry long-term financial and operational implications. Yet many business leaders begin the process without fully understanding how representation structure can shape outcomes.

Dual agency — where a brokerage represents both landlords and tenants — is a legally permissible model used by many large brokerage firms. However, legality does not eliminate the practical risks that arise when obligations are shared between parties with competing interests.

This article outlines key considerations for tenants evaluating representation models.

What Is Dual Agency?

Dual agency exists when a brokerage (or individual broker) represents both sides in a commercial real estate transaction.Large full-service brokerage firms such as JLL and CBRE provide both landlord and tenant representation services, which can create dual-agency situations when the same firm is involved on both sides of a transaction.

In a dual-agency scenario:

• The broker owes duties to both landlord and tenant
• Neutrality replaces exclusive advocacy
• Certain strategic information may not be shared
• Negotiation posture is balanced rather than tenant-aligned

For many tenants, this structure is not immediately visible — yet it directly affects negotiation outcomes.

Is Dual Agency Legal in Commercial Real Estate?

Dual agency is permissible in many jurisdictions, including Arizona, provided that:

• It is fully disclosed
• Both parties consent in writing
• The broker acts impartially

Regulators allow informed clients to choose neutrality if they believe it serves their interests.
However, disclosure does not resolve structural conflict.

What Are the Risks of Dual Agency for Commercial Tenants?

Dual agency introduces several material risks for occupiers, particularly in competitive or complex transactions.

1. Limited Advocacy

A broker cannot negotiate aggressively for a tenant without affecting the landlord relationship.

Result:

Negotiation posture is moderated, not optimized.

2. Restricted Information Flow

Confidential tenant strategy — budget, timing, flexibility needs — may not be fully leveraged if the landlord is also a client.

Result:
Landlords may gain insight into tenant priorities, reducing leverage.

3. Reduced Competitive Tension

Dual-agency firms may emphasize internal listings or existing landlord relationships.

Result:
Fewer alternatives evaluated → less pricing leverage.

4. Influence of Recurring Revenue

Landlord relationships often drive recurring assignments and broader revenue streams.

Result:
Economic incentives may not align with tenant-only outcomes.

When Does Representation Structure Matter Most?

The impact of divided representation becomes particularly significant when:

In these situations, the cost of moderated advocacy can be substantial.

How Is Tenant-Only Representation Different From Dual Agency?

Tenant-only representation eliminates divided incentives at the structural level.

This model ensures:

• Exclusive loyalty to the tenant
• Full access to all available properties
• Negotiation leverage without internal listing influence
• Confidential strategy fully protected and deployed
• Alignment with business priorities and long-term objectives

This creates a clear, consistent advocacy position throughout the transaction process.

How Keyser Approaches Tenant Advocacy?

At Keyser, we do not participate in dual agency.

We represent only tenants and owner-occupiers.

This commitment supports:

• Transparent market evaluation
• Objective strategy and benchmarking
• Ability to introduce competitive tension among landlords
• Strong, principled negotiation positioning

Our advisory model is supported by global partners, cross-market expertise, and AI-enabled market intelligence to help clients make informed decisions with clarity and confidence.

Why Should Business Leaders Understand Their Representation Structure?

Dual agency is lawful and common in commercial real estate.

However, legality does not remove structural limitations — nor does neutrality deliver the same strategic value as dedicated advocacy.

For tenants navigating long-term commitments and complex real estate needs, understanding representation structure is fundamental to protecting economic outcomes and operational flexibility.

In high-stakes real estate decisions, clarity of alignment supports clarity of results.

Want to better understand how your current representation structure may affect your next lease decision? → www.keyser.com/lease-review

FAQs About Dual Agency in Commercial Real Estate

Why Is Dual Agency Risky for Commercial Tenants?

Dual agency can limit exclusive advocacy because the brokerage has obligations to parties with competing interests. This can affect confidentiality, negotiation posture, and how the tenant evaluates market alternatives.

Is Dual Agency Legal in Arizona?

Yes. Arizona permits dual agency with disclosure and informed consent from the parties involved.

How Can a Tenant Avoid Dual Agency?

A tenant can choose a tenant-only representation firm that does not represent landlords or property owners, eliminating dual agency at the brokerage level.