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Gain Leverage in Commercial Leases

rsz gain leverage in commercial leases

Today's Tenant Rep Tuesday Tip topic: Gain Leverage in Commercial Real Estate Leases - How to Gain Leverage in Negotiations

Knowledge is key to knowing how to leverage commercial lease negotiations. Below are a few ways for tenants to gain leverage in their next commercial lease negotiation.

  • Start the Process Early – If you wait until 30 days before your lease expires then the landlord knows you don't have time to consider many other options. Depending on the market and your space size, start the negotiation process at least 4 to 12 months before you need space or before your lease expires. You may feel like you are starting the process too soon, however, if you want to leverage you need time to negotiate. With time on your side, you have more leverage.
  • Have 2 to 3 Options on the Table – Negotiating multiple commercial real estate spaces for lease at the same time creates a competitive environment between landlords. Why would a landlord grant you optimal concessions if they know you are not considering any other options? In a hot market, landlords are going to give the space to the first company that signs the lease so have a 2nd or 3rd option to fall back on. If the landlord knows you are seriously considering other options besides theirs you will have more leverage.
  • Maintain Control – No matter how the opposing negotiator acts you must maintain composure, anger, your environment, etc.
  • Seek Perspective – When trying to gain leverage consider each person's perspective of why you're negotiating and what each seeks from it.
  • Alter the Other Persons Wants or Needs – Introduce future opportunities about your business. Allude to the possibility of your company growing larger, taking more space, and doing a longer lease term.

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