How to Negotiate a Commercial Lease for Corporate Tenants

For commercial tenants, negotiating is a fact of life. Luckily, remembering this will let you go far.

Negotiating is a F.A.C.T.

Forecast your need for space

Assess where utilization can be improved

Create leverage for your tenancy

Take advantage of low costs for a great lease

If you want a great lease, negotiation is a pivotal part. So, if you're a corporate tenant, read on. We'll dive into the elements of negotiating a successful lease. 

Forecast Your Need for Commercial Space

To get your best possible lease, you should be prepared to accurately forecast how your space needs will evolve in the future. This will allow you to fully optimize your footprint with the most efficient lease possible. 

Forecasting also helps tenants stay ahead of the curve by preparing for any anticipated growth in personnel or operations. This is especially true for tenants looking to sign a long-term lease. Accurately anticipating growth and how you will optimally utilize the space allows organizations to maintain adequate room down the line, enabling businesses to continue operating effectively.

Without proper forecasting, companies may find themselves bound by a space that no longer fits their needs. For some this may mean outgrowing a space or, on the other end of the spectrum (and more likely right now), you have too much space and are paying for square footage you no longer need. Read What to Do With Extra Office Space: A Guide for Corporate Tenants.

Finally, accurate projections are key to ensuring that companies are able to make use of available incentives offered by landlords such as rent discounts with long-term leases or taking on additional square footage. Such negotiations can only be made when there is an accurate understanding of how much space is required. Otherwise, tenants may end up settling for terms which are not beneficial in the long run due to an inaccurate estimate of their needs. In light of this, it is necessary for corporate tenants looking to negotiate a great commercial lease to properly forecast out all potential space requirements before signing any agreements.

Assess Where Your Current Utilization Can Be Improved

Once you understand your need for space with forecasting, you'll have a better understanding of how to get closer to your ideal utilization. This will shed light on where you can cut under-utilized spaces. So, whether you're looking to negotiate a new lease or renegotiate an existing lease, accurate understanding of one's space usage allows you to make informed decisions when it comes to streamlining your properties. 

In addition, assessing where space utilization can be improved across entire portfolios can generate savings on a much grander scale. By understanding which properties may be under- or over-utilized within a portfolio, corporate tenants can identify opportunities to cut real estate costs, all which maximizing their efficiency.

This can help keep costs low by reducing overspending on unnecessary unused spaces. It also gives businesses the chance to optimize the use of their real estate assets by redistributing activities across different locations in order to maximize efficiency and sustainability.

This process is easier when utilizing up-to-date data analytics. This data allows corporate tenants to forecast potential future opportunities while also providing insights into historical trends that will help them better negotiate the terms of any new leases they take on. 

But regardless of what tool you use, by taking control of your workspace utilization needs, you can ensure you'll get a great lease that benefits your company, as well as protecting your bottom line in the long run. Through assessments of current usage patterns along with data analytics both at an individual property level and across an entire portfolio, companies are able to identify any areas for improvement and use this information when negotiating a great lease agreement.

Create the Leverage for Your Tenancy 

When negotiating a great lease, corporate tenants should be aware of the value they bring to the table and use it to create competition in the market. By sourcing multiple properties and showing interest, landlords will recognize that these tenants are in high demand and thus offer better deals. This can significantly reduce rent prices and add extra benefits such as more flexible terms.

Furthermore, conducting thorough research into the current market can also give tenants an edge when it comes to negotiations. A tenant with extensive knowledge of the average asking price in their market, vacancy rates, and other market-specific information can tremendously come in handy when it's time to negotiate with landlords. This makes landlords more willing to work out a favorable arrangement for both parties since they know that there's far more empty offices than there are tenants looking for space. 

If your landlord knows that they can lose you in the midst of an Office Apocalypse, they’ll be more incentivized to give you a good deal. 

Finally, having strong negotiation skills is essential for corporate tenants who want to get the best possible deal from a landlord. Appeal to your landlord's best interest. Remember, when negotiating, what you give is what you get. Don't expect your landlord to bend over backwards for a short-term lease. Understanding what kind of approach best appeals to the property owner on the other side of the table is a key component to getting a great lease agreement.

In conclusion, leveraging your potential tenancy is a critical step in negotiating a great corporate lease as it allows corporate tenants to create competition amongst landlords, while demonstrating their value at the same time. And in order to do this, tenants need an in-depth understanding of the current market conditions as well as what key factors they want in their lease.

Take Advantage of Low Costs for a Great Lease 

The current market is more favorable than ever for corporate tenants looking to negotiate a great lease. With the increasing office vacancy rates, landlords are being forced to lower costs in order to stay afloat. This presents the perfect opportunity for companies who are looking for a larger space or bigger footprint - they have the power of negotiation on their side. 

For those planning a long-term office lease, taking advantage of low costs now can save big money in the future. Lower rent rates also mean you can get bigger spaces, better locations, and / or more amenities for a better price. Learn how to make all this a reality when looking for a new office space by enrolling in the free course below.

Without having to pay a premium for these features, companies can ensure that their office space meets all of their needs without breaking the bank.

Securing a low cost lease will help boost profits over time by freeing up cash flow and giving access to more resources that can be put towards other areas of growth within the company. Furthermore, renegotiating an existing lease at lower rates can provide even greater financial stability and security over time, allowing businesses to further expand operations without worrying about costly overhead expenses. 

Overall, the current market presents an excellent opportunity for corporate tenants seeking to negotiate a great lease - one that is affordable yet still offers quality amenities and beneficial lease terms at no extreme cost. Now is the time companies can save big on both short-term and long-term leases while ensuring that their office space provides everything that they need for success into the future.

Negotiate with a Tenant Representative

For a corporate tenant who negotiates alone, the process may seem easy and quick but you may be sacrificing the best deal.Tenant reps know that the initial lease is a draft. It is a starting point to begin negotiations. You have a lot of room to work with the lease’s outline and content after receiving their first drawn-up copy. If you are working alone, it is more likely that you would accept the landlord’s lease within the initial few drafts. While appearing to save you time initially, it could gravely cost you in the long run in money and complications. Tenant reps initiate a back-and-forth negotiation process that could potentially take months. This time is often vital to landing you the lowest price and the most optimal terms for your business.  

That's because representatives read through leases with a fine-tooth comb. Their experience and market intelligence can weed out any terms that may cost you.  

When you are dealing with your company’s second or third largest expense, you should never be alone. Real estate is a massive financial commitment, so you want to be prepared on every account. So, don't take any chances and work with the expert, unbiased True Tenant Reps™ at iOptimize Realty®. With 30+ years of experience negotiating on behalf of our corporate clients, we have achieved millions of savings for them. We are ready to help do the same for you.

Talk to a True Tenant Rep™ today.