Dec 11, 2019

4 Concessions to Negotiate in Your Corporate Lease

By Don Catalano

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4 Concessions to Negotiate in Your Corporate Lease
When it comes to doing business, the original price is rarely the actual price.  If you negotiate the right way, you can usually get the vendor on the other side to come up with significant discounts or other inducements. This is particularly true when it comes to negotiating your corporate lease.  Here are four of the concessions that you can usually ask for -- and frequently receive -- if you really know how to negotiate.

 

1. A Lower Rent Rate

In most markets, the rent that a landlord asks for a corporate lease is rarely what he or she will settle for in a negotiation.  Upfront, they won't tell you this. In addition, they also might not let you know what combination of terms will unlock the lowest rent, or how much you need to offer to get them to be willing to enter into a negotiation with you.  While starting with an offer that is below their asking rate is the first step, the rest of the process can require give and take and careful negotiation.

 

2. Free Rent

As a concession to get you to move in, you may be able to get a few months of free rent thrown in on a lease of some length. This is reasonable because there is probably a period that you have control of the space but you cannot use it -- such as during construction or moving.  At the same time, landlords also realize that signing a lease and all that goes into it is expensive for you, and many are willing to help reduce that burden for you.  Whether you get free rent, how much you get, whether or not it also includes expenses, and other factors are all subject to negotiation.

 

3. Tenant Improvement Allowances

While it's possible that you could find a space that is perfectly configured for your needs as is, many tenants work with the landlord to improve their spaces for a custom fit.  Doing construction is rarely inexpensive and, at the same time, the work that gets done adds value to the building itself as well as to you as the tenant under your corporate lease. Because of this, many landlords will provide an allowance to help cover some of your construction costs. Others will help to finance those costs along with your rent payment. And some will do both. What will your landlord do? The only way to figure out is to ask and negotiate.

 

4. ...And More

Finally, if the landlord wants your tenancy badly enough, just about anything can be negotiated. Want a longer corporate lease term? Options to renew? Lower annual rent increases? Free after-hours heat and air-conditioning? The right to let your employees bring their dogs to work? Just ask.

 

Getting Maximum Concessions

Getting the most you can out of your landlord isn't an easy process. You need to understand how they think, and what they prioritize. At the same time, you have to have intimate knowledge of their competitors and of the terms that tenants like you are actually getting in the current leasing environment.  If you're a local market expert, this isn't an unreasonable ask.

 

If, however, you are like many businesses and know your business well but are not a student of the real estate market, getting some help can be the best way to get everything possible out of your next corporate lease. Working with an experienced tenant representative lets you tap into his or her knowledge, negotiating skill, and time to make sure that you truly get everything that the market will bear.

 

Take a look at some of our other great articles:

The Top 4 Commercial Real Estate Concerns

Managing Your CRE Portfolio as a Second Job

How to Manage Your Commercial Real Estate Portfolio

 

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Topics: corporate lease

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Don Catalano

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