What to do with a Tough Commercial Lease Negotiation

In this property market many of the lease deals that we negotiate are tougher due to the outdated or poorly informed requirements of a landlord, and the market savvy intentions of the tenants. As real estate agents we should negotiate the lease deal with the best outcomes for our clients, but how do you do battle with a client landlord that just will not listen to the facts as they apply in today’s terms?

The property market has changed and that includes rents, time on market, methods of marketing, incentives, lease terms and levels of enquiry. To take a vacant tenancy to the market in this economic climate we need the best solutions and strategies in all situations. Without a clearly defined target market strategy for the vacant tenancy nothing will happen fast. Wasting your time or that of the landlords is not a wise strategy today.

The key difference in this property market between getting a successful lease done or having a hard to lease property at inflated asking rentals, will always be information. The leasing and managing agents that research the market facts fully will always have a better chance of converting the client landlord to more realistic negotiations. This is the information that you need:

  1. Asking rents in today’s market
  2. Incentive levels as they apply to different property types
  3. Details of vacancy rates in the local area
  4. Time on market for each property type
  5. Levels of property improvements, services, and amenities sought by tenants today
  6. Comparable property details in the local area
  7. The details of recent leases completed in the local area

It does not always matter where you start your rent for the premises, but it does matter where the rent is headed over the term of the lease. A well crafted solicitor prepared lease that incorporates the landlord’s investment plan will always pick up the rent and shape it from the start through rent reviews of balance and growth.

Agents should be across all industry rental trends and comparable properties as part of the lease marketing and negotiation process.

By John Highman

John Highman is an International Commercial Real Estate Author, Conference Speaker, and Broadcaster living in Australia, who shares property investment ideas and information to online audiences Worldwide.