Negotiating commercial leases: Keep success quiet
Tuesday, July 03, 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 his own business, savvy real estate agents and brokers are specialized sales people. 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 commercial tenant as the amount of rent he or she pays will directly affect the entrepreneur’s financial bottom line.
Whether you are leasing a new for the first time or negotiating a lease renewal for your business, here are some tips:
Keep success quiet
One of the main reasons an entrepreneur will be forced into a rental rate increase for a lease renewal term is because the landlord believes that the tenant can afford to pay it.
The better your business is doing, the quieter you must be about that success. It’s important to stifle your staff, as they are often the ones to tip off the property manager.
While a landlord usually won’t accept blame for poor performance, he will take credit (and rental increases) when times are good.
Reduce your rent now!
With the exception of shopping center tenants who report their sales, most landlords don’t know if businesses are prospering or struggling. Just because you are doing okay is no reason not to try for a mid-term rent reduction right now.
If the landlord has already granted rent relief for other tenants your focus should not be can I get a rent reduction … but how much and will it be a rent abatement, short term rent relief, or simply a rent deferral?
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