Using a Professional to Negotiate Better Lease Terms
Posted August 2017
After payroll, the building lease is often the largest expense for your organization. Once the lease is signed, you may not think about it until it’s time to renew. At that point, you may wish for some concessions from the landlord, but often lose out. If you start the transaction at the wrong time, you lose leverage and posture. If you don’t know the market, you are simply begging or bluffing. If you can’t handle conflict, you will most likely receive even more pressure and stress from the landlord or seller to make you uncomfortable and force you into making a decision that you will regret.
For this reason, you may benefit by using a real estate professional to assist you with negotiating the lease or renewal. Our company hired a professional to assist in our search for a new office space and negotiating terms with our new landlord. The fee was well worth the service and additional benefits.
Building owners often hire property management and leasing professionals. The owners know the value of using experts to maximize their return in terms of higher rental rates. You could do the same thing, and at little or no cost. The fees to real estate professionals in lease negotiations are usually never a direct expense to the tenant. Instead, they are paid by the landlord as part of the closing of the lease, much in the same way the realtor is paid by the seller on a property sale.
While your personnel costs may be fixed in terms of the number of employees and the market rates for compensation, real estate is often more negotiable. You can decide if you want to be in an office building, retail center or a specialized type building. You can decide if you lease or own. You can determine the size, location, and amenities your space will offer. You can choose to be in a stand-alone or multi-tenant building. You can determine the length of lease, concessions you ask for, economic terms, business terms, etc.
The bottom line is there are tens to hundreds of thousands of dollars available to either be won or lost in every commercial real estate transaction. Your profitability affects your customers, your staff, your family, and many others. Maximize every commercial real estate opportunity by taking advantage of the best resources available to you.