Are you afraid to negotiate? In other cultures, the spirited marketplace is where children from a young age learn to buy. They watch as Mom or Dad hondle for goods as they hem and haw over a purchase as though their life savings depended on it, and make the poor merchant plead that his kids will soon starve before finally agreeing to pay the price.
By contrast, most Americans just hate to negotiate anything. Don’t get me wrong, we love a bargain. Kids will stand on line around the block to get the latest IPhone or bargains on Black Friday. Dads will research the auto blue book dealer value of a car down to the leather seat belts, and Mom’s “TSV” on QVC but to really negotiate— now that is something else entirely. Not only is it a skill that we Americans don’t have, it is something that we find a bit distasteful.
It should therefore come as little surprise that most office tenant business owners hate to negotiate a lease. As a matter of fact, most will wait until the very last minute to even begin a conversation with their Landlord or explore alternatives. Very few, in my experience, take the initiative to begin the discussion. As a negotiator of 40 years now, my goal when meeting new clients is to try to demystify the process.
The lease negotiation process is really rather straight forward, however, the key to any successful negotiation is to start with your objectives in mind. What are your “must have” items and which items are you willing to negotiate? The art of the deal, in this case, is to understand the objectives of the Landlord or Seller of property when you present your terms.
For example, the Landlord may want to show a “face rate” of a certain rent per square foot to his lender to obtain the maximum value of the property; so he may prefer to offer a free rent concession off the table or outside the term of lease.
Another example, is knowing that the Landlord makes far more money when renewing the lease than during the initial term of lease since the interior build-out is now fully amortized. If the initial construction allowance were, for example, $15 per square foot for a five year lease term, the Landlord would now have a $3.00 per square foot greater profit in the renewal term going forward.
Knowing simple tricks like these are the easy part of the negotiating process. The development of a comprehensive strategy to effectively negotiate on behalf of a tenant/client is an element of trust that only comes from the strength of experience. To earn your trust, a tenant or buyer must first know that his real estate advisor is a fiduciary who has “his” best interests in mind. Who do you trust to negotiate for you? With more than 21 years of satisfied clients, we at Dickstein Real Estate Services invite your inquiries to learn why “Our Difference Is Your Advantage®”.
Categorised in: Negotiations