Hunt Corporate Services" width="115" height="144" /> John Hoblin, Hunt Corporate ServicesQ: My lease is coming due within a year. I intend to renew. I don’t need a broker, right?
A: The reasonable assumption goes something like this: “I have a good and long-established relationship with my landlord. I know what I can afford to pay and will negotiate a fair renewal with my landlord. Besides, if I introduce a broker, it’s just another cost item that will be charged back to me in higher rent.”
Your landlord is in business to make a profit, to increase the value of his real estate. If you or your landlord seek each other out to renew your lease, what leverage are you bringing to the table, especially if you say you’re interested in renewing?
What will make your landlord give you the best deal possible? The best possible deal will be obtained when you can demonstrate to your landlord that you are ready to move.
Put yourself, for a moment, in your landlord’s shoes. What’s the worst possible scenario? – An empty suite, unit or building. When space is vacant, the landlord faces an unknown quantity of time to re-lease the space, an investment of capital to modify the space for a new tenant (architectural & construction), legal fees in drawing up and negotiating a new lease, brokerage fees, and in competitive times such as these, free rent that is given as an incentive to lure a new tenant.
During all this time and capital outlay, the landlord has been, at minimum, paying real estate taxes, maintenance to upkeep the property and mortgage payments. After all this time and outlay of capital, a new tenant is still an unknown entity!
The best way to impress upon your landlord that you are serious about moving is to hire a broker. The broker must prepare a complete list of comparable properties. You should visit with your broker the best candidates, “as if” you had to move. After this, your broker should prepare Requests for Proposal (RFPs) for your existing landlord and several of the best available options.
When the responses are in and analyzed, you are finally in a position, through your broker, to arrange a meeting with the landlord. Prior to the meeting you and your broker should review the objectives: Rent structure, free time, renovations and other criteria should all be clearly established. At the meeting, the complete list of comparable properties can be strategically displayed, and smart, leveraged negotiation can begin.
Remember that your best negotiation will occur when you have the ability to walk away from the table. During this process, you may find an alternative with significant enough savings and other attractive benefits to make it worth your while to move. At minimum however, you will put your current landlord in an equal position as landlord’s with vacant space and hungry to attract you as a tenant. You will lose this leverage by trying to negotiate directly and not hiring a broker.
Fortune 500 companies follow this system to achieve the best market-driven deals possible. This same resource is available to you by selecting the right broker.
John Hoblin, CCIM, is the senior managing director of Hunt Corporate Services, Inc., New York, N.Y.
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