TEN COMMERCIAL REAL ESTATE LEASE NEGOTIATION TIPS
a former landlord negotiator)
1)Begin the process early.
This provides negotiating leverage and wiggle room.Start at least 18 months prior to your lease ending date.Researching the alternatives can take 3 months, negotiating a
lease can take 3 months,
constructing new improvements at another location can take 3 months.Allow
a generous amount of additional time for unexpected delays in the
2)Never give any landlord the sense that their space is the only
one that works for your company.That
is when the landlord pushes the profit button.You will never get the best deal available.
3)Always create several truly viable leasing alternatives.Get proposals from each.Donít give a positive indication to any landlord until you have
in your hands a fully executed new lease, lease renewal or lease
4)Always use a tenant cost comparison spreadsheet.Make the prospective landlords fully aware that you will be
instantly weighing and comparing their lease proposals with a customized
the key factors from your various lease proposals.Use the resulting bottom line cost comparison as your primary
negotiating lever with each landlord to bring down the cost of the
5)When using a tenant cost comparison spreadsheet, ensure that the
landlord at each leasing alternative is providing you with all the key
cost factors you need. If it is clear that any landlord is holding
back cost comparison information, simply remove that property from the
list of competing alternatives.
6)When using a tenant cost comparison spreadsheet, pay close
attention to the landlord profit centers:A) Input key factors on base rent increases, tax and operating
escalations, and other cost areas that increase over time. B)
Actively use the instant cost comparison in your negotiations to
eliminate, reduce, or cap the landlord profit centers.
7)Before beginning the process, consider engaging an expert office tenant
representative broker.If you are
an expert in your business, you are probably not an expert in the
commercial real estate office leasing business.Market dynamics change daily.
An expert tenant lease negotiator is
much better equipped to manipulate the market to the tenantís
each prospective landlord to be an expert landlord lease negotiator, manipulating
the office leasing market to the landlordís financial advantage.
8)If you decide to engage a tenant representative, consider
choosing one from an exclusive tenant rep commercial real estate firm.There are many firms in the commercial real estate industry who represent both landlords
and tenants.This practice is
viewed by many tenants as a major conflict. An exclusive
tenant representation firm never wears the landlord hat.It is solely focused on negotiating the best terms for
tenants at every building in the local market.
9)Ask your office tenant representative broker about ďcompsĒ (financial details on recent
office leasing transactions in your
local office market).The more
comps your tenant rep broker has to reference, the more effective he or she will be in
manipulating the local office market.
Engage your own commercial real estate architect to verify the accuracy of the stated usable
square footage of the office space.
10B) Talk to other
office tenants directly regarding a prospective landlordís
reputation in the areas of office building management and fair dealing.
A Letter of Intent negotiated by your expert tenant rep and detailing
all critical business terms to be reflected in the lease is essential.
Thereafter, always engage a commercial real estate attorney to review
and negotiate the language in the landlord proposed lease draft. An
expert office tenant representative broker will also weigh heavily in
the lease language negotiation. He or she will work in tandem with
the tenant's attorney to the tenant's great advantage.
From 1989 to 1998 John Tobin was an in-house
landlord lease negotiator for two of the largest office building
landlords at that time: JMB Properties Company and Heitman
Properties Ltd. Since 1999 John Tobin has been a Partner of TENANT
which specializes in national office tenant representation for major
rep .com provides one trusted point of contact
John Tobin, supported by
strategic partnering with the best local tenant rep brokers across the country.
Mr. Tobin can be contacted at (216)