Week 1

Creating Leverage in Lease Negotiations

How to Create Leverage

In order to get the best deal when looking for commercial space, be sure you are creating leverage in your lease negotiations.  Hiring a broker is the first step you can take toward creating leverage. For example, you can go to the grocery store to purchase milk and notice the price says $2.99.  You can’t take that jug of milk to the cashier and ask to pay $2.00 instead.  She is going to tell you what the price is and insist that you either pay full price or leave the milk. The cashier can be likened to the leasing agent (landlord’s broker).

You, the business owner, would be handled in the same manner if you approach a landlord unrepresented by your own broker.

They will tell you how much the rent is, determine the condition the space will be delivered in, and  with no input from you.  You can either take it or leave it.  If you have a broker, the landlord understands negotiations will take place at some point and they will be willing participants.

Once you are solid on the location that you want to occupy, let your broker know which property you want.  Your broker will contact the landlord on your behalf and tell them, “Congratulations!  Your property has made my client’s short list.  Send me over your best terms.”  That short email will help you create even more leverage.  The landlord’s broker now understands that you have options in front of you.  They also understand they will to have to offer you a deal with favorably aggressive terms.  They are aware you are “shopping around” and the war begins to attain your business begins.