31 – How to Negotiate a Lease A-Z

Welcome to Episode 031 of the Corporate Real Estate Podcast, brought to you by LeaseSmart.com. Your host is Craig Melby, the founder of LeaseSmart, whose objective is to find companies the best facilities and get them the best terms, making their business more profitable and less vulnerable to future, unpredictable circumstances.

If you would like any free Space Worksheets, letters of intent or proposals then Craig Melby is more than happy to share the documents that he uses. Just e-mail him at info@leasesmart.com.

Perhaps one of the first steps in negotiating a commercial lease is that you need to know what kind of space you need. Once you have that figured out then the second step is to keep in mind that there is a difference between the asking price and the renting rate. When you are talking to the landlord be sure to ask what the last few renting rates were and follow up with questions about the TIA: the Tenant Improvement Allowance, because the kind of TIA that they offer will factor in heavily as you consider the renting rate.

Be mindful of the conflict of interest. The broker of the seller is there to lease that space, so they might not be able to tell you about another space that they know of that would be a better fit for you. If you have a leasing agent of your own, they will be able to look out for your interests and your interests alone.

OK, so let’s say it’s time to make an offer. Craig Melby likes to make it verbally first so he can read their body language before he sends it over in writing. He typically says something like, “Your property would be our 1st choice if…” That is the truest way to communicate your intentions while still maintaining some ground.

If he is worried about offending the seller with a low offer he says, “Look, I don’t know what it’s worth, but this is what I can pay. Let me know.”

The time of the written offer is when you nail down a few main lease concerns like exclusivity, non-competes, the anchor tenant in the building and rent commencement. These things should be out on the table and not kept quiet until the signing.

As you get your attorney involved you need to manage the process. Don’t give up your power. Use a Real Estate Attorney specifically and don’t let the attorney hold up or ruin the deal.

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For more information, be sure to visit LeaseSmart.com