Does Sarbanes-Oxley Boost Tenant Rep Firms?

Spin Control Zone... "Strict governance requirements mean that corporations must be able to prove their selections are transparent -- not only in the selection of each service provider, but in the execution of each transaction. Conflict of interest is not an issue of 'spin,' it's an issue of performance."

That’s Michael Silver, President of Equis Corporation, responding to the April 6 Dispatch, Opposition Research: Do You Do It?

In the Dispatch, I commented that brokerage firms "spin" facts to their benefit. (I know this is shocking.) I wrote: "If you do tenant representation exclusively, you emphasize the absence of conflicts representing landlords. Conversely, if you're a full service firm, you emphasize that representing landlords provides important market intelligence."

Equis, of course, is a tenant representation firm. But Silver points to independent research done by Watkins Research Group, which found that "75 % of CREs considered it likely their companies’ selection of commercial real estate providers would be influenced by increasing scrutiny of conflicts of interest and that 83% said they expected an increase in scrutiny of their internal real estate practice because of Sarbanes-Oxley regulations."

According to Curt Watkins, his 2005 Study of Corporate Real Estate Executives included respondents from 85 Fortune 500 companies and 78 Financial Times Global 500 companies.

Watkins limits the sale of his research to eight real estate service providers from his list of the top 25, and he customizes the results for each purchaser. He told me that he had sold the 2005 study to six firms, but was not publicly authorized to disclose the purchasers. (Equis disclosed their purchase directly to me.)

Watkins releases very limited results of his study to the public. But here's an interesting finding that he shared with me: 22% of surveyed companies plan "to replace an existing service provider." Sounds like change may be afoot.

-- Peter Pike