An important part of successful commercial lease negotiations is understanding where your landlord is coming from and using that information to determine what your leverage is. Here are a few questions to ask yourself to figure this out, as suggested in the article “Develop Negotiating Skills”:
Why does the landlord need to rent out the space?
Did a business recently fail in the space and now the landlord needs to find a new tenant in order to stay financially stable? Have there been issues with the location or a high turnover rate? Educate yourself a little on the recent history of the space.
How will the landlord benefit?
A landlord might be extra motivated to rent the space if there is some extra benefit for them. For instance, if you are particularly compatible with another tenant who is considering leaving their space if a business like yours doesn’t move onto the property, they might be more motivated to rent to you.
What leverage do you have and what leverage does the landlord have?
Once you know a little bit about the landlord’s motivations for renting you the space, make yourself a simple list—a column with leverage you have and a column with leverage the landlord has. Consider both sides’ vulnerabilities and pricing power, and use this information in negotiations to determine where you can be tough versus where you can be flexible.
Doing a little research and planning before negotiations can help you enter them with more confidence!