Negotiating a lease and getting a good deal can be a daunting task. The truth is, a good deal will typically not get handed to you, you will have to negotiate it. It’s important to know how to negotiate office leases. So, here are some things to think about when looking for space to rent to avoid mistakes and get the deal you are looking for.
First things first, it’s important to find and use competition. You always want to have a backup plan so that you can be prepared to walk away if needed. The key is to convince the landlord that you are considering other options and they are competing for your business deal.
It is also important to control any information or feelings going out to other parties about the lease. Don’t discuss anything without your tenant representative, you don’t want them knowing how you really feel about the deal. This is so you can maintain leverage and continue to negotiate.
Don’t get too caught up in the minute details of the lease, focus on the length first. Try and find a shorter lease with renewal options. For example, it would be ideal to get a 2 year lease with a 2 year renewal option. This is so that you aren’t locked into anything that might not work for your business down the road. Say you want to move or expand, but you are stuck in a 4 year lease. Finding a shorter lease with the option to renew is a smart move.
Working on your own and representing yourself can pose some difficulties. Use a tenant broker/representative and attorney/real estate lawyer in the negotiating process. A broker will help represent you to the prospective landlord. They will help educate you, locate potential properties, set up showings, negotiate for you and help prepare offer letters.
You will also want to get a lawyer to review your lease and any amendments to make sure everything is legally secure. Your broker and lawyer should work together to help this process run smoothly. Which is why it is important to let the lawyer focus on negotiating legal clauses, and the broker focus on negotiating rates.
When negotiating a lease you also want to think about a tenant improvement allowance or lease concession to help with costs. These are lease clauses that would allow you to make changes and improvements to the space at little or reduced cost. You will also want to discuss how the space must be returned to the landlord upon the end of the lease. It might be a good idea to negotiate the lease to where it states that you will return the property in its original condition except for typical wear and tear, damage or unavoidable casualties that were not your fault, or changes allowed by the landlord.
Never accept the first offer from the landlord, you can always try and negotiate a cheaper rate. Additionally, take your time thinking it over, a hasty response hurts your chances of having leverage over the negotiation process. Be bold when negotiating and always ask for more than you can get. This is also where you can ask about lease renewals or lease concessions, as mentioned above. If you maintain leverage, the landlord will be more willing to come down to your desired rate and meet your demands in order to keep your business.
Negotiating a lease doesn’t have to be scary, and it doesn’t have to be done alone. Here at MWM, we offer tenant representation in deals just like this. Contact us if you want more information on how to negotiate office leases. Or, if you need help locating a property or negotiating a lease, give us a call, we do it all!