Negotiating commercial leases: Give the loser one last chance
Wednesday, April 11, 2018
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 two money-saving tips for tenants:
Hold back the deposit on offers
Most offers to lease state that the deposit is due at the time when the tenant signs to the offer to lease. Giving an up-front deposit for most entrepreneurs will minimize their effectiveness in future negotiations.
Instead, modify the clause (in pen) to say that the deposit will be payable to the landlord 72 hours after the landlord accepts the offer. Other options include your making the deposit due and payable once both you and the landlord have both removed your conditions or upon signing of the formal lease document by both parties.
Give the loser one last chance
If you are simultaneously negotiating with two or more landlords (our recommendation as it creates competition for your tenancy), one deal will eventually win out. However, you should always go back to the losing landlord offering one final chance to win you as a first-time tenant or for the renewal period.
It's difficult to know when you have received the landlord's best and final offer. Faced with losing your tenancy, the landlord may surprise you with an 11th hour deal that changes your mind on which location to lease.
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