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. Firms such as JLL and CBRE frequently operate under this structure due to large landlord-representation portfolios.
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.
Why Dual Agency Is Legal
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.
The Practical Risks for 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 These Risks Matter Most
The impact of divided representation becomes particularly significant when:
|
Scenario |
Why It Matters |
|
Lease renewals |
Landlord has informational advantage; advocacy is critical |
|
TI / build-out negotiations |
Capital and schedules require firm leverage |
|
Portfolio expansion |
Requires unified strategy and consistency |
|
Complex facility needs |
Industrial, medical, and manufacturing space |
|
Long-term headquarters decisions |
Brand, workforce, and capital implications |
In these situations, the cost of moderated advocacy can be substantial.
Conflict-Free Representation as an Alternative
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.
Conclusion
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.
If you are evaluating a lease renewal, relocation, expansion, or portfolio strategy, our team can provide an unbiased review to inform your decision — with no obligation.
Contact Us:
Address: 6400 E. McDowell Rd, Ste. 100, Scottsdale, AZ 85257
Phone: (602) 9. KEYSER
Email: info@keyser.com
Free Lease Review:
Get clarity and confidence before your next negotiation. Request your complimentary lease review here → www.keyser.com/lease-review
Frequently Asked Questions:
Q. Why Is Dual Agency Considered Risky for Tenants in Commercial Real Estate?
A: Dual agency creates structural conflicts because one brokerage represents both the landlord and the tenant in the same transaction.
Even when disclosed and legally permitted, this arrangement limits a broker’s ability to negotiate aggressively, protect confidential information, or introduce true competitive tension between landlords. The result is reduced leverage and potentially less favorable lease terms for the tenant.
Q: What Are the Most Common Problems Tenants Face Under Dual Agency?
A: Tenants working with a dual-agency firm may face:
-
Limited advocacy, since the broker must remain neutral
-
Restricted information flow that can expose tenant priorities
-
Fewer property options, because internal listings may take precedence
-
Misaligned incentives, as landlord relationships often drive recurring revenue
Each of these factors can diminish negotiation power and financial outcomes for occupiers.
Q: How Can Tenants Avoid the Risks of Dual Agency?
