Once you have chose your options for office space and you like them, the next
step is to acquire the best deal possible. But at times knowing what to bargain
is peculiarly complicated. Landlords may be worried to congest empty spaces,
but they are also keen to make up for the money and except you are not
cautious, that negotiation lease you sign now can be filled with hidden
charges, rising fees and clauses that knock down when you would least
anticipate it.
Obtaining great deals on office space is a
blend of market timing, and good tenant planning.
The real estate office market has strike a
tipping point. With increasing vacancies and new sublease opportunities coming
to market daily, when it comes to renting an office space it’s the tenants
market. Rental rates are falling and will continue to do so. Landlords and
Business centers are providing huge concessions to new tenants, but you won’t
get the finest deal except for you know what to request. Smart business leaders
know this as a suitable time to leverage their tenancy and take benefit from
the market conditions. To take advantage of current market conditions business
managers must bear in mind the following important success factors:
1. What is the Optimum
Price?
When moving closer to the negotiating
table, the peculiar tenant who’s doing this for the first time is most centered
on obtaining the monthly rent as low as possible. This is the most frequent
mistake tenants commit when a broker is not representing them. The
correct way to scrutinize a deal is to consider its total value (i.e. annual
value, taxes, lease period, free rental period and other charges). That’s the
way landlords evaluate deals, and that’s what you should also do.
2. When to Initiate
this Process?
Start the process early. This offers
negotiating leverage and wiggle room. Initiate at least a year months before
your lease ending date. Exploring the options can take 3 months, negotiating a
lease can take 2 months, and if there is building new developments at another
location can take 3 months or more. Set aside a generous amount of extra time
for unforeseen delays in the leasing process.
3. Don’t Give a
Hint
In no way give your landlord the feeling
that their space is the only one that works for your company. Always create
numerous feasible leasing options. Obtain proposals from each. Don’t grant a
positive suggestion to any landlord until you have a fully executed new lease
or lease renewal document with you.
4. Do your Groundwork
Always employ a tenant cost comparison
spreadsheet. This spreadsheet comprises pricing of the potential offices you
have chosen. Make the landlords completely aware of the fact that you will be
directly weighing and comparing their lease suggestions with a tailored Excel
spreadsheet. Put in the main factors from your different lease proposals. Make
use of the resulting bottom line cost comparison as your major negotiating
lever with each landlord to bring down the price of the competing sites. While
making use of a tenant cost assessment spreadsheet, make sure that the landlord
at each leasing option is offering you all the key cost factors you require. If
it is clear that any landlord is delaying cost comparison details, just remove
that property from the catalog of competing options.
When employing a tenant cost comparison
spreadsheet, pay attention to the landlord profit centers:
· Put
in key factors on base rent increases, tax and operating escalations, and other
cost areas that increase over time.
· Use
the cost comparison keenly in your negotiations to eradicate, lessen or limit
the landlord profit centers.
5. Obtain a
Representative
Before starting the process, think about
engaging an office tenant representative broker. If you are proficient in your
business, you are most likely not a skilled in the profitable real estate
office leasing business. Market dynamics change each day. An expert office
lease negotiator is much better prepared to influence the market to the
tenant’s fiscal advantage. Wait for each prospective landlord to be an expert
office lease negotiator, controlling the office leasing market to the
landlord’s economic advantage. If you settle on to employ a tenant
representative, think about choosing one from an exclusive tenant rep
commercial real estate firm. There are a lot of firms in the commercial real
estate industry who stand for both landlords and tenants. This practice is
observed by many tenants as a main clash.
Inquire your office tenant representative
broker about economic details on current office leasing transactions in your
local office market. The more deal your tenant rep broker has to reference, the
more efficient he or she will be in influencing the local office market.
Appoint your own commercial real estate architect to confirm the accurateness
of the affirmed usable square footage of the office space.
Speak to other office tenants frankly
regarding a potential landlord’s reputation in the areas of office building
management and fair dealing.
