Top 10 Tips on Negotiating Office Space Rentals
Searching for an office space for rent, yet concerned about negotiation of office space rentals? The top ten lease negotiation tips are a quick guide to securing the right property for your business:
1. Start Early – if possible 12 to 18 months before the end of your current lease. Finding the right property for your business can take up to 3 months with an additional 3 months for negotiation. Add new construction or rehabilitation, and a total of 9 months may pass before you have access to the location.
2. Reticence – holding your cards to your chest is never a bad idea. Never seem overanxious to get in a place in front of a landlord; hedge to obtain the best deal on a lease.
3. Collect Offers – ask for proposals from landlords for the properties you are interested in. Review at a distance will allow you to think things over prior to signatory on a new lease.
4. Cost Comparison – application of costs in excel will enable you to compare the various attendant costs and lease value in spreadsheet format. The spreadsheet method of working up costs is typically a reliable bargaining chip. Add key factors to come up with the right formula for offsetting costs or as a negotiation mechanism to bring down the cost of a property.
5. Listings – ask the landlord for competitive listings that they may hold or for market listing. Both can be used to discuss features and cost. Use this in comparison with the costing spreadsheet.
6. Point out Profit Centers – address landlord profit centers such as base rent increase criteria, tax and operating costs and other fees or costs that may be added over time. Use the profit center model to target and eliminate landlord profit center line items in the agreement.
7. Expert Negotiation – consider an expert broker for negotiation of properties to reduce hassle. Find someone who knows how to take advantage of market shifts in your favor. Brokers are experienced at curbing costs to tenant benefit.
8. Tenant Representative Firms –another way to go are tenant representation firms. While commercial real estate agents that offer this practice is more rare, those specializing in tenant priorities are likely to fight for tenant interests at the point of contract so that later issues to emerge will be resolved in writing. This ensures against liabilities and other obligations to property management that might otherwise arise under more loose agreements.
9. Comps – details about recent rental agreement transactions in the area or ‘comps’ are a good source of negotiating leverage.
10. Research – communicate with local architects, neighbors, tenants and attorneys knowledgeable about the property you are interested in. Know the landlord you are dealing with. The reliability of aggregate opinion reduces the chance that you will take on an unfair lease agreement. Engaging with the community promotes goal oriented intentions, and lends credibility to information at time of negotiation. Lessons learned are money saved and protection against liabilities and unforeseen duties to contract.