Julie Johnson shares her wealth of experience in negotiating leases from both the landlord and tenant perspective. Listen to learn the secrets to saving money on your business’ lease. Apply these tricks to your next lease negotiation to save your business money.
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Key Takeaways:
- In most all real estate transactions, a tenant should hire a professional to represent them. Because a landlord usually pays the broker who represents them in finding tenants a commission—which is also shared with whoever the tenant has representing them—it is considered a business expense for the landlord, not the tenant.
- When determining the right location for a business, the type of business should be taken into consideration. Service providers for healthcare, for example, should be in an area where they are easily found, recognizable, where there is a lot of foot traffic, or where they would be near other medical providers. Office tenants should be near where their employees live to reduce drive time. Real estate professionals can help with these specifics in determining where a business should be located and can provide their expertise in specific industries.
- Hiring a real estate professional can be invaluable when navigating lease negotiations. Real estate experts will have the knowledge and experience to successfully find a balance between the desires of the landlord and the tenant, and establish a positive relationship between them for the long term. Additionally, real estate professionals help their clients understand the language and terms of their lease, provide protection from additional problems in the future, and help clients understand and expect the specific costs of transactions as well as their liability for personal guarantees that landlords desire.
- There are some situations in which tenants should build flexibility into their lease to account for the potential rapid growth of their business in the future. This can be accomplished through negotiating an early termination halfway through the lease term, building in the option to sublease space that is not being used, or working with a landlord to find additional space, extend a lease, substitute a different lease, or move to another location that is available with the landlord. Depending on the state of the real estate market, it is possible for a tenant to renegotiate the terms of their lease with their landlord. When there are higher vacancies in the market, lease rates are generally lower and concessions are more likely given. Tenants should always be aware of their contingency plan, knowing that the market will not always be as it is at the time of signing their lease.
