The Role of a Tenant Rep in Commercial Real Estate

Aviva (00:00)
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of the week week week this week on commercial real estate secrets we have Joey Kline. Joey is a commercial real estate broker out of atlanta who works for JLL. Joey thank you so much for being on the show today

Joey Kline (00:34)
Sure, Aviva, thank you for having me

Aviva (00:36)
Joey tell us and the listeners a bit about yourself, who you are, what you do and how you got there

Joey Kline (00:44)
Okay, I am, I'm a tenant rep at JLL. I've been with JLL nine years on next Monday. So it's the only place I've ever practiced real estate and been a broker. I think very, very highly of the company. Specifically, I'm in the tenant rep group. I mostly work with office users, a little bit of flex warehouse, but mostly office.

Aviva (00:55)
Hey.

Joey Kline (01:13)
I do work all over the country, but majority of my work is here in Atlanta, which is where I grew up. am a native. Outside of real estate, am on a board of a organization that advocates for better transit in the Atlanta region, which is a frustrating and seemingly endless pursuit.

that will likely never happen. I'm a big cheerleader of Atlanta, not just because it's part of my profession, but because it's just an infinitely better place than when I grew up here. I would not be living and practicing in the former version of Atlanta in which I grew up. I'm a big fan, and I'm a big fan of real estate. I enjoy being a broker very much.

Aviva (02:11)
So if I've never heard of commercial real estate or tenant rep before, how would you explain tenant rep to a fifth grader?

Joey Kline (02:20)
you know, it's, actually often think about this because I have a four and a seven year old and it's hard to kind of explain to them what I do. It's not entirely tangible. so I have thought about that. What I, what I tell them, and of course they're a little bit more elementary than a fifth grader, right? So maybe we can advance this for a fifth grader. I tell them to look at the big, big buildings in the middle of the city and I say, daddy helps people, work in those buildings

Aviva (02:52)
So tenant rep is something really interesting to me. A lot of people, including myself, get their start in the business doing tenant rep. Something I noticed is that the average person doesn't understand that you can represent a tenant, help them find a space, and then get paid by the landlord for the work that you've done.

How do you go about finding your tenants and how did you learn about tenant rep in the first place?

Joey Kline (03:24)
I learned about, yeah, so I am not one of those straight out of college became a broker. I'm somewhat jealous of those that knew they wanted to do this at 22. I did not realize I wanted to do this until 30, but better late than never, I suppose. I discovered real estate because I very haphazardly was interacting with a very different type of real estate in a previous role. I've always been in sales, which is...

I mean, I've done sales and everything I've ever done, right? So that's kind of the commonality of brokerage and how that stuck out. I came back to Atlanta to go to business school. I got out of business school. I did not want to go work for a consulting firm or an iBank. I have always been a small company guy that has problems taking orders. So I went and found a startup and the startup happened to be building natural gas fueling stations, which I'll won't bore everyone on what that actually means.

Suffice to say to build these things you need land on which to build them. I was employee number five of the company I joined because I wanted to see how a business ran. I just paid a bunch of money to learn how business ran I wanted to see all of it and I got to see all of it that was very cool as One does at a small company you just kind of do whatever needs to be done Even if you don't have that expertise I became the guy that was tasked with finding dirt for us to put these sites on having

no qualifications for which to actually perform that activity. And so I would drive around industrial parks and I'd find a couple acres. that was coupled with the time of the last decade, decade and a half that Atlanta became an infinitely better, more interesting place to be and kind of rediscovered its urban core that it had left for dead in the 90s when

kind of flew to the suburbs. And so I combined these things and I said, all right, this real estate thing is really cool and Atlanta is this awesome place and we have these cool warehouses that are now fancy breweries and these big buildings. And I don't know, this real estate thing kind of seems cool. I gotta figure out how to do it. So I then, because I'm a sales guy, took the next six months and set up meetings with every developer and every broker and learning where do I fit in real estate?

And I made my way to JLL and they had an opening on the tenant rep team and I said, okay. so that's, that's kind how I got

Aviva (05:55)
Can you talk a bit about the office market from 2020 to today?

Joey Kline (06:03)
All right, if no one hears anything else, the takeaway should be that the demise of the office market has been greatly exaggerated. That's the executive summary on page one and page 10 of this report.

Very much like retail, we have been over -officed in this country for a very long time. And a reckoning was going to come at some point. COVID was the event that forced the reckoning. There's just, we estimate, by we I mean JLL's research group, not just my own opinion. We estimate that 25 to 30 % of office product in this country is functionally

There's just you know, and we've all seen it right you can be in the business or not like you just drive around and You see a bunch of really uninspiring crap that you would never want to go work in on a day -to -day basis. Okay? And it's gotten by You know basically by having the Walmart strategy of low cost Well, that's not really enough anymore. Right if the office is quote -unquote optional or to a degree depending on the company

So you have product that just doesn't cut it. I mean, you have product that can't, and I mean this actually literally, not figuratively, you have product that couldn't pay people to take a tour. You have buildings that just can't even get a look. And so it becomes a cycle of death because even if you had an owner that had to wear a withal to actually lease the building, how do you go to bank and tell them, hey,

I know we look the exact same as the 15 other suburban office buildings around us, but we have this team that does X, Y, and Z different. We're going to able to lease it up. Why should they believe you? Why should they even give you money to do that? So inevitably you can't finance it. You can't improve your building. You can't attract anyone to look at it. Your existing tenants, not all of them leave, but a good bit of them renew somewhere else, or excuse me, move somewhere else instead of renew. And maybe you're left

with 30 -35 % of your tenant base which is loyal and doesn't need a fancy office and just status quo. But then you can't cover your debt and then you can't service the building. So, I mean, it's a, can I curse lightly? It's a shit show, all right? Those buildings are, it's just a slow bleed out of the patient. So there is a good,

Aviva (08:35)
Yeah. yeah.

Joey Kline (08:49)
there is a large amount of the landlord community, a minority, but a significant minority that is in peril. However,

What has happened is that the office market has forever been bifurcated completely. Much like in our society, you have the top 10 % and the bottom 90 % at kind of what office buildings have become. There is a portion of office buildings, and this is city center and suburbs that are well located, great amenities, places that are inspiring and where people want to go and be around their colleagues that are doing just

and are having no problems whatsoever. And then there's a good portion in the middle that are, they're fine, but it's real stiff competition. And then there's about 25 % of the low end, which no one's going to lease these buildings, let alone even tour them to potentially lease them. So look, for a tenant rep like myself that controls the key to leasing, which is the tenant, I've never had more control in my career.

So it's a good place for the tenant to be, although I will say it is not as much of a two -for -one appetizers type of situation that some might want it to be. On the landlord side of things, look, it really depends on the nature of your product. It's kind of, it's really binary. You're either doing great or you're not.

Aviva (10:09)
you

So what are we doing with this, we'll say 25, 30%, I believe you said, of office product that is functionally obsolete?

Joey Kline (10:33)
If I had that answer, I'd be raising a fund to try and buy them. I'm not going to pretend like I have a great idea there. I mean, look, at the end of the day, there's only so many uses. So it's not going be an office building. It's not going to be a warehouse because one, based on the location of these buildings, you're not going to be able to get it probably zoned or approved.

Aviva (10:37)
Okay.

Joey Kline (11:02)
okay, for it to be that, even if it could reasonably be converted to a warehouse. Maybe it's retail. mean, look, retail is historically underbuilt or like 5 % vacancy. It's kind of shocking. So maybe it's retail, you know, at a certain point, know, multifamily, depending on the market you're in, know, Southeast. The Southeast accounted

1 .4 of the 1 .6 million net new population from the last year. So maybe in the Southeast you can support more apartments, other markets that are stagnant. I don't know about that. It's not gonna be a data center. My prediction is it's either sitting collecting cobwebs

Maybe it's a sort of public park neighborhood amenity, or maybe it's turned retail. And maybe some markets it's multifamily, but it's gonna take a while to work that

Aviva (12:10)
It's interesting you talk about retail. My husband and I were in Japan. We were in Tokyo at beginning of the year. And what I noticed in the center of Japan is that retail goes up five stories everywhere. It's just.

Joey Kline (12:17)
Yeah.

Aviva (12:30)
stories and stories and stories of retail and it was like holy smokes like America is first floor retail maybe second floor if you're in a shopping mall but it's a really interesting concept to have multi -level retail and it works there so

Joey Kline (12:47)
Well, of course, it's interesting you're talking about Japan, and I assume you're mostly referring to Tokyo. know, Tokyo is the most populous city in the entire world, right? It's extraordinarily dense. It makes a lot of sense why it needs to go up there. There's just only so much land to put it on, and by so much, I mean very little. You know, in an American setting and certainly in an American setting of a city that is in

south or mountain west, you know, you got more than enough parking lots to do that. But I hear you, hear you, right? They're getting creative. You know, I will qualify what I just said. In my mind, the answer I just gave is one that I think refers more to a suburban or slightly suburban location with, you know, lots of land and asphalt around it. I think it's a very different proposition for something in the middle of the city.

you know, the ability to turn, not a modern office building, right? A modern office building with a 25 ,000 foot floor plate, you can't turn that into apartments, but buildings from the middle of the century that are actually really cool and have a ton of character, like the type of place that people would want to live, and maybe they have 10 to 15 ,000 foot floor plates, those are really good candidates for potential conversion.

And we're definitely, I mean, we're already seeing that in Atlanta. There are a number of properties that are, know, the city of Atlanta is RFPing, you know, vacant office building that, you know, was government forever. It's just terrible on the inside. But because it was from a different time, the floor plates are much more conducive for that sort of

Aviva (14:37)
Hmm. It's interesting. It's, yeah, we'll see what happens. I don't think anybody saw the COVID. You know, before COVID, was retail's dead. That was the media. Then COVID hits and office is dead. And like I said, I say this all the time. I don't pull out my tissues for your local landlord. I think most are fine. But it'll be interesting to see how it plays out.

As a tenant rep broker, what is one of the crazier asks you've ever gone in for and got and achieved from a landlord?

Joey Kline (15:20)
That is such a good question.

I mean, in previous era, it would be dogs in the workplace, but that's like not even novel anymore.

Aviva (15:34)
funny.

Joey Kline (15:35)
You know, I don't have one that's like entertaining, right? There was a client I had where, okay, I really don't know much about feng shui, but apparently the principles of feng shui dictate that certain directions have different energy than others. And so I was tasked that, this group, I've actually never ended up transacting and

Aviva (15:40)
Sure.

Joey Kline (16:03)
You'll see why based on how difficult this was. So it never ended up doing the deal. But the tour that I put together, it had to only target not just buildings, but the suite within the building. The front entrance had to face in a certain direction. And I think it was north. Had to face in a certain direction because of Feng Shui principles. I know. Yeah, right. I should have just said no right then and there.

Aviva (16:27)
That's what we call a red flag.

Joey Kline (16:33)
I think I was in like year two, and I was like, you know, yes, please, may I have some more? I will take whatever punishment you're bringing.

Aviva (16:39)
Yeah

I had a, no, I resonate with those early years. had a, somebody called me at 6 .30 a .m., a prospect, and it wound up just being a nightmare and we never closed anything and ever since then I kind of have a rule of thumb. Brand new prospects if they call you at 6 .30 a .m.

If we've done a lot of deals together, if we're getting to the finish line, I'll talk to you at 6 .30am, but if I've never met you before, you can wait till 7 .30am.

Joey Kline (17:18)
That's right. That's right. Yes. And anyone that, you know, has such a little tact that they call someone new at that time, that's a red flag.

Aviva (17:29)
It's funny. I've got one more question. I'm curious what type of industries you're seeing thriving right now in the office space and what industries you're seeing doing the opposite.

Joey Kline (17:46)
You know, look, the biggest users, or I guess those that are really have been super active, tech was extremely active at the later end of the last decade. That's not the case anymore, right? Tech and coworking are not the ones that are driving leasing the way they were 2016 through 2019. Right now, it's legal, it's professional services, it's financial services.

Architecture and engineering. I still have a decent number of technology clients that are doing deals, but it is you know, just because There was so much VC funding at the end Really honestly through 21 You know, they were just all hiring so much and with the honestly, it's not so much the

VC funding drying up compared to historical levels. But it's the fact that with a bit of a shift in the economy, so many finance departments cut back SAS licenses. And so you just have a ton of sales teams at these technology companies that just didn't need all those people. And really, at this point, just don't need as many going forward. So technology is still leasing, but they're definitely not driving the market.

Aviva (19:13)
Fascinating. Very, very interesting.

Joey Kline (19:16)
Yeah. I mean, look, I think it partially depends on the market. mean, I'm, I'm speaking mostly for Atlanta because Atlanta is actually pretty, you know, we're in a good middle ground of like not too highly concentrated, with one, industry. You know, AI has been obviously a big source of leasing in San Francisco, which certainly needs it. but you know, for us

It's generally across a number of industries, but those that are focused outside of direct technology.

Aviva (19:50)
Fascinating. Joey, what makes you happy with your day to day in commercial real estate?

Joey Kline (20:00)
you know, as I alluded to previously, I don't do very well with directions and bureaucracy. now obviously I work for a very large company, but my role within the company is one that is a little bit different from the nature of, you know, the other kind of more corporate folks. I find this to the best of both worlds because I, you

No one is telling me what to do, but I have the resources and backing of a Fortune 200 company. you know, I like, I think autonomy is a very underrated quality in someone's life. The ability to control my own day and do what I want.

and have things not be the same and not have to be somewhere in front of a computer all at one time. I like the variety. like the, I like that rush when like you go in and meet someone for the first time and it's like, what's going to come of this? Right? Could be a waste of time or, you know, I could, I could mold a rel I know this sounds very simple, but like the ability to

transform an interaction and relationship with just your words. mean, like it's, it is somewhat of an ego trip, I think, for salespeople to be able to sit down with a stranger and, you know, make that clay out of nothing into something that will someday put money in my bank account that I use to feed my kids and have a little bit of fun.

that I still love just that like, what's gonna happen moment. brokerages, look, besides the sharp emotional swings that come with being a commissioned salesperson, I love being a broker. It's the best of all worlds in my

Aviva (22:10)
It's funny, right before we started talking, I had a long time client text me. My grandma died and one of the clients came to the Shiva and one couldn't make it and she was apologizing, she didn't make the Shiva and I was like, I just can't believe that.

Joey Kline (22:22)
Yeah.

Aviva (22:30)
like we have become this friendly that you're coming to my family's funeral. So like, it's a cool thing, like you said, to go into a meeting and not know the relationship or the success or the failures that will come out of it. And it's really rewarding.

Joey Kline (22:49)
Totally. Yeah, yeah, that's, man, that is a very, that's a close relationship. Now, here's the interesting part. Is this client also Jewish or is this a

Aviva (23:02)
Muslim. Muslim, which is, that's the crazy, I know.

Joey Kline (23:03)
Muscle

That's even better. That's even better. And the fact that like, you know, it referencing the Shiva, that's really nice.

Aviva (23:14)
Yeah, it's very cool and it's something I really, really appreciate and it's one of the best parts of our job. You know, that's on the landlord rep side, but still that we can create that relationship specifically with two religions that have been so polarizing, specifically right now. So.

Joey Kline (23:32)
Totally.

Yeah, really. So are you both landlord and tenant?

Aviva (23:40)
Yeah, we generally deal more with the landlord side, but under the right circumstances, well, I love doing tenant rep. I love doing tenant rep with sophisticated tenants.

Joey Kline (23:56)
Yes, you're absolutely correct. You can have a very tough time with it with the wrong type of tenant, with the wrong type of credit.

Aviva (24:10)
Right, but one of the best parts of our job, I find, is you get the right tenant with the right credit and you're negotiating on behalf of someone who's just an unbelievably equipped business professional. It's like, whoa, this is fun.

Joey Kline (24:24)
Yeah, that's right. you really only, you can only be as good as your tenant lets you be, right? I mean, being in the industrial space, I think it makes total sense, certainly in this market, to want to be on the landlord side of things.

Aviva (24:35)
Yeah.

We're very fortunate and it's Denver's not that big of a town. There's only 2200 warehouses in Denver Metro. There's, know, in Denver proper, I should say, not Metro, but Denver's small compared to Atlanta. So.

Joey Kline (25:08)
Yeah, so I mean, look, I'm a city nerd, right? Square miles and population density, and I just love the comparison between both of those. I think that the actual landmass of the city limits is pretty similar. The metros are obviously very different.

Aviva (25:30)
Yeah. And I only spend time in, I go to Atlanta. My sister has a four year old, a six year old and a seven year old. So we just go up to Sandy Springs and we don't, that's where we hang out for now. When the kids get older, we'll start hitting Atlanta, but I do love it down there. So.

Joey Kline (25:42)
Yeah, totally.

That's great.

Aviva (25:54)
Well, Joey, thank you so much for your time today. Where can our listeners find you, follow you, contact you, et cetera?

Joey Kline (26:03)
Yeah, I actually do have a website where you can see some of the work that I've done. It is very, I don't know how I got this URL, but it is joeykline .com, J -O -E -Y -K -L -I -N -E .com. You can also just call my mobile, which is 404 -579 -5723.

Aviva (26:22)
Joey, thank you so much for your time today and for everybody listening. We'll see you next week.