While the last several years have seen a shift towards a more tenant-friendly market, things are slowly but surely swinging back toward a point of equilibrium, meaning that they may well move back in favor of landlords. Tenants looking to find a new office space would do well to find an advantage in negotiations in any market, but especially if the market becomes more landlord-friendly. The following are three tips for making sure that you maintain the leverage you need in lease negotiations so that you can hammer out a deal that benefits you and your company in any real estate market.
Get a Tenant Representative on Your Team
Hiring a tenant representative to drive your search for an office space and help in negotiations is one of the easiest ways to gain some leverage. A qualified tenant broker offers a wide range advantages, including:
- access to all of the viable office spaces on the market
- alternate suggestions that you may not have considered on your own
- a skilled negotiator on your team
Hiring a tenant representative will also make you a more respected and formidable team in the eyes’ of the landlord and his team. Before attempting a search on your own, consider bringing one of these experienced professionals into the mix.
Bring in the Competition
Use the portfolio of options created by your tenant broker to create a sense of competition for the landlord. Many tenants forget how pivotal a role competition can play in negotiations. Your landlord’s team should understand that you have several office space options before you. You never want the other side thinking you are totally committed to what they have to offer. Whether you are negotiating a new lease or a renewal, make sure that the team across the table from you has a keen sense of all the market options you are considering; this can force them to put a better deal forward than they would if they think you’re all-in from the beginning.
Make Sure that Time is on Your Side
Make sure that you begin preparing for a move or a renewal well in advance. The time you need will depend on the size of the space you are looking for; a larger space will naturally require a more complex search and lengthier negotiations. Lease negotiations can be quite complicated, and you never want to be left making a rush decision at the last minute. Rushing things through isn’t good for your company logistically or financially, and can harm your leverage during negotiations. You don’t want the landlord’s team thinking you are pressed for time and need a space STAT. Plus, if the landlord’s team has committed a lot of man hours to hammering out a deal, they will be more likely to want to see it through and get the deal done.
Senior Vice President at Colliers International, based in Houston, Texas.