Interview with a Broker. Benefits, Challenges, and Perspectives of Commercial Real Estate Brokerage in Mexico

In commercial real estate, brokerage is pivotal in sealing deals between property owners, potential tenants, and buyers. In a recent interview, Alejandro Delgado, Country Manager Mexico at SiiLA, spoke with Marco Antonio Duran, Senior Manager of Transaction Services at Colliers, about what brokerage entails, the due diligence process, and how it adapts to the ever-changing trends in the real estate market.

Duran states, "Brokerage is a professional intermediary service between property owners for business use and users or investors seeking such properties." In this regard, a broker acts as a bridge between both parties, sometimes serving the property owner and sometimes representing the potential tenant or buyer, aiming to negotiate contracts and ensure transactions are carried out efficiently and beneficially for both sides. However, the role of a broker extends beyond merely guiding and advising clients to make informed and strategic decisions in a highly competitive and ever-evolving market. Commercial brokerage also involves seeking investment opportunities and maximizing commercial assets' value, making it essential for success in this dynamic sector.

"If we're talking about a property owner client, maximizing property value isn't about artificially inflating the price, but helping the user or investor see the advantages and real benefits of purchasing or renting that property, as the case may be. This requires a systematic and objective evaluation of the property's strengths, opportunities, weaknesses, and threats at that moment to provide a comprehensive and objective perspective," explained Duran.

SiiLA tracks industrial, office, and retail transactions for lease and sale every quarter. By monitoring these commercial agreements, SiiLA provides up-to-date data and detailed market analyses, making it a valuable tool for conducting a process known as "due diligence."

Due diligence is a thorough investigation process before purchasing, selling, or investing in a commercial property. The objective is to assess and verify all aspects of the property and the transaction to identify strengths, risks, and opportunities, ensuring, as much as possible, that the investment is sound and beneficial for the negotiating parties.

In this regard, Marco Antonio Duran emphasizes the need to gather all necessary documentation early in the operation, including key aspects such as document review, financial evaluation, physical inspection, market analysis, environmental assessment, zoning and regulations, and legal and contractual analysis, among others. Having the documentation as early as possible in the negotiation process is crucial, as lacking any essential document can jeopardize the deal or operation.

According to Durán, when representing the property owner, working closely with them is vital to ensure all necessary documents are readily available before listing the property. In the case of representing the buyer or investor, maintaining constant communication with the owner is crucial. This involves requesting a comprehensive list of requirements from the outset and diligently following up to ensure all necessary information is provided. Taking these precautions helps prevent potential obstacles and ensures a smooth transaction.

"The time required for due diligence can vary greatly depending on the company and the type of document that might be missing. It's not the same, for example, if an architectural survey needs to be done as if you need to regularize the property," explained Duran, a Colliers brokerage expert.