Exclusive Tenant Representation Agreement: Should a Startup Sign, and What to Change

What exclusivity gives the broker

Certainty that the work will be paid for. A broker on an exclusive can put real hours into your search, speak to every landlord as your one authorized voice, and chase subleases and unmarketed floors without wondering whether another firm will close the deal. It also stops two brokers submitting one startup to the same building, which confuses landlords and starts arguments about who is owed.

What exclusivity costs a startup

Freedom to switch. If the broker turns out to be slow, or the senior person who pitched disappears, an exclusive with no exit keeps you there until the term runs out. It can also reach further than you expect: a floor a friend told you about, or a renewal of space you already occupy, may fall inside it unless the agreement says otherwise.

It does not usually cost money. The commission is normally paid by the landlord under its own agreement with the brokers, exclusive or not. Read the compensation clause for the cases where that fails.

Five clauses to narrow before a startup signs

• Term. Match it to a real search: a few months, with an end date and no automatic renewal.
• Geography and property type. Office space in the Manhattan neighborhoods you are actually considering, not every lease the company might sign anywhere.
• Carve-outs. Name any space you found yourself before signing, and your current office if a renewal is possible.
• The tail. After the term ends, the broker stays protected on floors it introduced. Hold it to a written list of those floors and a short period.
• Termination. Either party can end the agreement on written notice if the search stalls.

Every one of these is negotiable before you sign and hard to move after. The tenant representation agreement explains what each clause protects. These are business points, so ask your attorney to confirm the wording.

Do several brokers at once get a startup more options?

Usually not. More brokers does not mean more market. You get less commitment from each firm, one building pitched to you twice, and arguments over who introduced a floor.

One broker on terms you have read is the cleaner answer. Before a search begins, ask the firm, ours included, whether it wants an exclusive and for how many months. A brief is three numbers, your headcount, your date and your budget, and a first shortlist can be ready within 24 hours. The floors below, sized for about 20 people, can be read with their asking rents before you sign anything with anyone. How to choose a tenant rep broker covers how to vet whichever firm you pick.