TenantSee Weekly: Modern Workplace Planning: Solving for Experience Part VI: Negotiating the Lease
Leases vary by building, by market, and by market circumstances. In most major metros, when dealing with larger buildings, the lease document is sophisticated and complex, addressing a broad range of variables that will have a material impact on the occupier’s experience at the building, as well as its cost of occupancy. If you’ve done a good job negotiating the letter of intent, you should begin the lease negotiation phase from a position of relative strength. However, even when the letter of intent is fully maximized, there’s still a lot to negotiate in the lease.
TenantSee Weekly: Successful Negotiating Strategies for Office Tenants
Many business executives know how to negotiate. Indeed, it’s a vital skillset essential to advancement in nearly all careers. But not all negotiations are equal. Negotiating leases on behalf of office tenants, for example, is a specialized undertaking. As with all negotiations, successful tenant lease negotiations are highly correlated with understanding the motivations of the counterparty. This means knowing everything about the landlord, including the equity and debt positions, the investment thesis, the leasing dynamic at the building (vacancy, lease rollover, etc.), the value of any recently completed comparable lease transactions in the building and in the market, and the overall market dynamic. These factors are fundamental to assessing leverage. Yet even when these basic elements are in place, the act of exercising leverage also requires special skills.
