Lease negotiations: ten tips for business tenants.

AuthorGrandfield, Jeff
PositionSPECIAL SECTION: Franchise & Business Opportunities

For many entrepreneurs, negotiating a good lease or lease renewal against an experienced agent or landlord can be a challenge. While a business owner focuses on marketing and managing their business, savvy real estate agents and brokers are specialized sales people. Their job is to sell commercial tenants on leasing their location at the highest possible rental rate.

Commercial tenants may go through the leasing process two or three times in their entire lifetime--yet they have to negotiate against seasoned professionals who negotiate leases every day for a living. Negotiating appropriate leasing terms is vital for an entrepreneur as the amount of rent paid will directly affect the financial bottom line.

Whether negotiating a lease renewal or leasing a new location for the first time, here are ten tips for business tenants:

* Negotiate to Win: AH too frequently, tenants enter into lease negotiations unprepared and don't even try winning the negotiations. If you are not even negotiating to win, you won't. With big commissions at stake, you can be sure the landlord's agent, on the other hand, is negotiating fiercely to win. Tenants should remember that it is okay to negotiate assertively.

* Be Prepared to Walk Away: Try to set aside your emotions and make objective decisions. Whoever most needs to make a lease deal will give up the most concessions. A good business in a poor-location will become a poor business.

* Ask the Right Questions: Gathering information about what other tenants are paying for rent or what incentives they received will position you to get a better deal. Consider that your landlord and his agent know what every other tenant in the property is paying in rent, so you must do your homework, too.

* Brokers ... Friend or Foe? Real estate agents and brokers typically work for the landlord who is paying their commission. It is not normally the agent's role to get the tenant the best deal-it is their job to get the landlord the highest rent, the biggest deposit, etc. The higher the rent you pay, the more commission the agent earns. If you are researching multiple properties, try to deal directly with the listing agent for each property, rather than letting one agent show you around or show you another agent's listing. Your tenancy is more desirable to the listing agent if he/she can avoid commission-splitting with other agents.

* Never Accept the First Offer: Even if the first offer seems reasonable, or you have no idea of what...

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