One of the biggest pieces of a real estate broker’s job is helping to negotiate the business terms that will be the basis for a lease. These are items like rental rate, lease term, improvement allowance, timing, security deposit, etc. The list goes on, and my typical proposal document can stretch beyond five pages.
Prioritizing your focus is the secret to juggling all of these items and coming away with an acceptable deal. It’s easy to say “everything is equally important,” but that’s not really true. Business strategy actually dictates what’s of primary importance.
A few examples:
Changing Product Lines: I had a client that wasn’t sure about the direction of their business over the next five years. When doing their analysis, there may be a shift in product lines, services, and geography. So while securing a low rental rate was important, flexibility and a short term lease was the priority. We structured a short term lease with multiple extension options.
Status Quo: I had another client that handles mostly contracts with public/government entities. They are confident their business would remain stable for the next decade and wanted to achieve the lowest possible rate to maximize margins. We secured a below-market rate for a decade, ensuring predictable below-market lease costs.
Acquisition Target: A client that was marketing themselves for a merger negotiated generous assignment rights to ensure that if they did get acquired, the previous owners would not get left with the lease obligation.
These are just a few examples, and each situation is different. It’s easy to say “We want everything,” but the landlord has priorities as well. If you can articulate your priorities and employ some give-and-take, there is a better chance for a successful negotiation that both the tenant and landlord will be satisfied with going forward.