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How Tenants Can Achieve Leverage in Lease Negotiation

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How Tenants Can Achieve Leverage in Lease Negotiation

Tenants Leverage - CRETucson Tips
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:
Leverage
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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