The Golden Rules for Renegotiating Your Office Lease
Office Lease means any space Lease for the workplace or any other administrative purposes, but specifically except all Mining Leases and Prep Plant Leases.
If there’s one indelible fact about the world of real estate, it’s that people don’t get what they deserve; they get what they agree on. The prospect of negotiating the terms of a commercial lease is one of the least appealing tasks that business owners must handle. Even so, nobody can deny the importance of securing favorable commercial rental terms. Before you set up a meeting with your landlord, here are some rules that you need to heed when negotiating your rent.
1. Find Your Leverage
Regardless of whether tenants or landlords have an inherent market advantage, there will always be something you can use for leverage. A good rule of thumb is to hide any hint that you’re sold on the space, especially when interacting with the broker or the landlord. If the landlord catches wind of a tenant’s desire for space and that the same tenant is unable to choose a different location, the landlord will use that to negotiate for terms that are in his favor. You should always have an alternative in mind. Being prepared to walk away from unfavorable terms is a powerful negotiating tool.
2. Think in Terms, Not in Rates
Most tenants tend to consider only the rental rate during negotiations when they should be prioritizing lease terms instead. The rationale here is that you may end up paying much more in the long term if you choose the wrong lease term. In most cases, tenants would end up paying much more for their space in exchange for a measly 5% reduction from their rental rate.
3. A Tenant Never Gets Anything for Free
For a similar reason that you should avoid getting free car upgrades from your car dealership, you shouldn’t be convinced to commit to a lease for its freebies and improvements. Much like negotiators at a car dealership, landlords will find a way to earn back the value of the freebies (most times, even more). Never agree to a longer-term in exchange for a couple of freebies. Remember that the costs are inherently embedded into the lease value.
4. Hire Professionals Who Want the Best Terms for You
Hiring Professionals for every position isn’t just a small business concern; it’s the main small business concern.
The reason why you need to hire lawyers to review your proposed lease contract is that brokers inherently have a conflict of interest, and they’re going to want the lease to push through. Brokers benefit from a successful lease because the value of their commission increases with the value of the lease. It’s important to get an objective opinion from someone who’s paid to negotiate the best possible terms that would benefit you. Real estate lawyers and real estate negotiation specialists like the ones from the Jeff Tabor Group are your best options.
5. Always Have an Exit Route
Once you’ve negotiated a lease under favorable terms, you need to negotiate for protective measures just in case something goes wrong in the future. If you don’t see your business using the space for at least five years, you might want to consider negotiating to have cancellation clauses included in your lease contract.
You get what you negotiate for. While this process may be uncomfortable for some people; especially for those who would rather avoid confrontation, it’s one that could potentially help your business cut down on expenses significantly. Arm yourselves with this knowledge and you just might get the lease conditions that you want.