1. Be Willing and Able to Walk Away – The biggest mistake most tenants make is not researching and having alternatives to their first choice, whether it's a new office space or a lease renewal on their existing space. If a landlord knows you are not willing to relocate you will lose leverage in negotiations.
2. Start your Process Early – Landlords know that finding office space can take at least 4-12 months (depending on your size) to find suitable office space, negotiate lease terms, create space plans, get preliminary construction bids, prepare lease documents, etc. If you wait until the last minute to ask for a renewal proposal you are basically telling the landlord that you are NOT considering other options.
3. Know the Whole Picture – Do other tenants having any problems with HVAC or parking? Is the owner/landlord selling the building? Are any tenants moving out? How much free rent are other tenants getting? Is the owner/landlord financially stable? You may not be able to get complete answers from the listing agent or building owner/landlord, however try to find out as much as you can.
4. Create Competition Between Landlords – The get to a successful negotiation is making the landlords, including your existing one, compete for your business. It will help to have an experienced advisor provide extensive market research, lease comparables, and negotiating experience to create leverage on your behalf.
5. Hire a Commercial Real Estate Lease Advisor to Represent You – Unless you are an experienced commercial real estate professional it's not typically a good idea to negotiate directly with a landlord on your own. An experienced representative will ensure you get the best possible lease rate, terms, concessions, and lease contract protection. Don't forget that a landlord's agent negotiates commercial leases every day. You may only do this every 3-5 years!
6. Hiring a Commercial Real Estate Lease Advisor Does not Cost You More Money – Hiring a Tenant Representative does not have a negative impact on a deal you get….meaning it does not cost you more money. Occasionally a landlord will “say they can save you money” by discouraging you to not hire a tenant representative. Do not be fooled. Landlord reps know that without a tenant representative you may be left in the dark about market lease rates, terms, & concessions, and less likely to research other alternatives……which means more money in the landlord's pocket.
7. Compare Apples to Apples – Sometimes business decision makers who are not experienced with commercial real estate leasing or current market conditions find it challenging to create a true “apples to apples” comparison of building options. Brokers and landlords use lease terms loosely in a lot of cases. Terms such as modified gross, triple net (nnn), full service gross, rental abatement, base years, load factors, escalations, etc are sometimes interpreted differently by landlords and commercial real estate agents. Having a good tenant representative in your corner will help you sort through all of this.