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How Tenants Can Achieve Leverage in Lease Negotiation

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How Tenants Can Achieve Leverage in Lease Negotiation


Negotiating a facility lease will have long term consequences long after the lease is signed. A
good lease will enable your company to grow, satisfy its employee needs and operate
efficiently over the long haul. In short, a good lease can provide a company with a competitive
advantage. By contrast, a poorly put together lease will create a lot of problems and
unnecessary headaches for your company for a long time to come. Here’s how to get the best
deal on your next lease:
The single most important thing that you
can do in order to negotiate the best
office lease is to get and maintain
negotiating leverage. The one that has
leverage dictates the terms of the deal.
You can forge all the tricks and tactics
that are promoted in books and tapes.
In the real world, these gimmicks simply
don’t work. The reality is simply that you
have to get leverage, maintain leverage,
and know how to use leverage in order
to get the best possible deal on your next
commercial lease.
Think of leverage as a “more for less” proposition. In other words, creating maximum benefit at
the least cost. In office leasing, the classic example of the tenant having leverage is when the
local office market is over built and the prospective tenant can simply walk away from one deal
and go to the next. In this environment the tenant is granted “defacto” leverage given market
conditions. But it’s a completely different story in a “tight” market. When the demand for space
exceeds the supply of available space, the landlord has the natural advantage. In this case,
the tenant must take certain steps to neutralize the landlord’s leverage. It is even possible in
certain situations for a tenant to wrestle leverage away from the landlord.
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