Wednesday, June 1, 2011

10 Leasing Insights - #10

Posted by: Dave Simonsen

Industrial Specialist

775 336 4667

Dave has more than 21 years experience as a commercial real estate broker. Dave exclusively works with industrial tenants, buyers, developers, landlords and land owners. He has represented companies such as AT&T, Barnes & Noble, Converse, DHL Worldwide, Delta Industries, Hawco Development, Lucent Technologies, IBM, Hopkins Distribution, Nextel, NEC, Sherwin-Williams Company, and UPS.

~10 Leasing Insights ~
Broker tips to better deals

Tip # 10
Why Creating Competition Between Landlords Helps You Get a Better Deal (even on renewals)

In the leasing cycle you have significantly more negotiation power prior to signing your deal (or signing your extension) than you do once you are in contract. Creating competition between landlords to win your business is a powerful tool for achieving a better outcome. Face it, your existing LL is betting you don’t want to move at all, so a deal on your existing space only improves when the landlord believes you have viable alternatives. The downside of this tactic is that finding multiple new spaces, negotiating deals and understanding all the costs associated with each one is a lot of work! There is nothing wrong with making your broker work for his or her commission!

BROKER INSIGHT: Landlords are like everyone else, they have different motivations at different times. Let’s assume you employ a broker, request proposals from 3 different landlords and gather the responses. Setting aside the financial factor – one is likely the low cost alternative – other important factors in the deal will demonstrate the LL’s motivation to sign a lease with you. One LL may offer more free rent up front in return for a higher face rate. Another LL may offer a low rate for you to take the space “As-Is”. The final LL may give you 3 or 5 year options with a great TI allowance. Each LL is looking for both a way to differentiate their space from the others and get the highest price they can out of you. Knowing a LL’s motivation at any given time is one of the most valuable insights a broker can give you.

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