Negotiating commercial leases: Size up your opponent
Tuesday, June 27, 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 two money-saving tips for commercial tenants:
Size up your opponent
Different leasing representatives are motivated in different ways.
For example, an in-house leasing representative working on a salary basis will be more concerned with your stability as a tenant. On the other hand, an outside realtor/agent will finish the leasing deal, collect his commission from the landlord, and may never work with or even see that landlord or you ever again.
Therefore, sizing up your negotiating opponent and their personal motivation is part of a well-planned leasing strategy.
Meet the property manager
The property manager is usually available to meet in person if the landlord is not.
After working with the landlord's leasing agent and signing a lease deal, you will begin dealing with the property manager. If possible, try to meet the property manager before signing the lease deal as this will give you the opportunity to ask pointed questions about their own professional experience (in the field and with the commercial property) and what their relationship is like with the landlord.
Confirm (verbally and in writing) any verbal promises made by the realtor/agent with the property manager. Your relationship with the property manager is important enough to start cultivating it in advance.
Don't be too assumptive
It's natural to make certain assumptions; however, when negotiating commercial leases, always get your assumptions confirmed.
For example, a retail tenant may assume she can close her store on Sundays; however, the landlord may expect the tenant's store to be open for business seven days a week. Ask, clarify and document your assumptions (if advance, whenever possible) to avoid misunderstandings.
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