What do Landlords and Magicians have in common? More than you might think. Both of them use magic. Magic is the art of misdirection and misdirection according to the dictionary is a form of deception in which the attention of an audience is focused on one thing in order to distract its attention from another.
Watch how the Landlord works his magic when negotiating a lease. “Look at this shiny object in my left hand,” says the Landlord! “In my left hand is the RENT”. He barks out–“what is that you said Mr. Tenant–you want to pay $2 per square foot below my asking price for rent. Sure, it sounds like we have a deal. Let’s shake on it!”
What just happened here? Did the warning alarms just go off in your head? They should have? Notice how the Landlord only talked about the rate per square foot. It all sounds so accommodating and the Landlord did just agree to come down by $2 per square foot, so it sounds like it must be a good deal, doesn’t it? Is it a good deal?
Before you shake hands, there are a few additional business items, namely the ones the magical Landlord is holding is his right hand that you should be aware of.
Here are just a few of them:
• SPACE EFFICIENCY: Ever notice how some office spaces are narrow while others are deep? Some have lots of windows with attractive perimeter private offices, but do the number of perimeter offices require extra circulation that may cause the layout to be a less efficient one? Have you had your own designer tell you how efficiently you fit into your space? Did he measure how much space you really require?
• ADD-ON FACTOR: Every building has a different proportion of common areas which factors into your rentable square footage calculation which raises your rent. Do you know what your’s is?
• WORK LETTER: Is the Landlord’s build-out allowance sufficient to construct the space turnkey (with no cash out of pocket)? If it is not, who pays for the additional construction costs? On the other hand, if the allowance negotiated exceeds the cost of your build-out, will you receive a credit?
• BASE YEAR: Is the base year the first year of your lease term or are there hidden escalation charges within the first year’s rent that you are not aware of?
• RENT CONCESSIONS: Were you able to negotiate some free rent and is that rent credit to be received all up front or will it be spread out over the term of lease?
• PERSONAL GUARANTEE: Is the lease being signed corporately or does the Landlord require a personal guarantee? Do your really want to risk the ranch on this one?
• SECURITY DEPOSIT: How much security deposit does the Landlord require?
• BUILDING SERVICES: Do you know what services are included in the rent that are paid for by the Landlord and which ones you pay for separately?
You know, I could write a book about all of this. Oh, it turns out that I already have. “The Complete Survival Guide To Negotiating An Office Lease, Secrets Your Landlord Doesn’t Want You To Know” was written for folks like you. If you would like to read some excerpts for free, visit my blog at http://dicksteinrealestate.com/blog/.
Equaling the odds in real estate negotiations is the “WHY” of Dickstein Real Estate Services. Our mission is to provide our clients with the most complete unbiased real estate advice using the most effective and efficient systems in the real estate business to obtain the best possible space at the best possible terms.
We invite your inquiry. Contact us for a no obligation lease audit and learn why “OUR DIFFERENCE IS YOUR ADVANTAGE®”.
Categorised in: Negotiations