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.
