3 easy tips for negotiating commercial leases
Wednesday, April 19, 2017
For many commercial tenants, negotiating a good lease or lease renewal against an experienced agent or landlord can be a challenge. While an entrepreneur focuses on marketing and managing, savvy real estate agents and brokers are specialized salespeople. Their job is to sell tenants on leasing their location at the highest possible rental rate.
Tenants may go through the leasing process only two or three times in their entire lifetime — yet they have to negotiate against seasoned professionals who negotiate leases every day for a living. Negotiating appropriate leasing terms is vital for a business owner as the amount of rent he pays will directly affect the company's financial bottom line.
Whether you are leasing a new location for the first time or negotiating a lease renewal for your business, here are three money-saving tips for commercial tenants:
1. Negotiate to win
All too frequently, commercial tenants enter into lease negotiations unprepared and do not even try winning the negotiations. Also, commercial tenants often mistakenly set their sights on just striking a fair deal.
This usually plays right into the hands of the leasing agent — the agent works for the landlord and is most certainly negotiating to win the best deal for his/her boss. If you’re not negotiating to win … you won’t. It’s okay to negotiate assertively!
2. Allow sufficient time
For a new location lease agreement, get started 9-12 months in advance to avoid unexpected situations and delays. Lease renewal negotiations should begin between 12-15 months before the lease term expires.
In the case of lease renewal negotiations, if you can't get a decent renewal rate, would you rather find out that you need to move with six weeks or six months left? When allowing for ample time in both cases, this will give you sufficient opportunities to look around and do your homework. Time will be your ally or your enemy — depending on how you use it.
3. Be prepared to walk away
Try to set aside your emotions and make objective decisions. Whoever most needs to make a lease deal will give up the most concessions — tenant or landlord.
Developing a mindset that includes walking away from any deal that doesn't suit your needs will save you time, aggravation and money.
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