This isn’t the first time my Lease Intelligence newsletter has emphasized the value of understanding your landlord. Most of the time, negotiating a good deal for my clients isn’t about
playing hardball or staring the landlord down, but understanding their unique circumstances and leveraging the opportunities presented.
I just negotiated a great office lease deal for a professional services firm. The firm has been a tenant in their building for close to 15 years. We approached
the landlord to discuss another five year extension with significant tenant improvements to modernize their office. Out with the big conference room…downsize those huge “partner” offices…in with some open, collaborative space. Yes, even traditional firms are getting with the workplace trends that resonate with millennials because these are the people they will be hiring over the next five years!
The owner stunned us with the news that they were about to go into escrow to sell the building. We had no choice but to wait patiently until escrow closed. So I researched the buyer. They were a local investor and manager of small multi-tenant industrial properties and business parks. They were established and professional, but this was their first class A office
investment.
After escrow closed I called the landlord with my congratulations and introduced myself. Then I gave my strategic pitch: we were presenting them with the perfect opportunity to remodel a moderate-sized office and use it as a showcase for new tenant improvement standards to show future prospective
tenants.
They got it…and they bought it. We asked for and got all kinds of little extras because the landlord saw it as an investment to help them market the building as a whole, not as a “spend” for one isolated tenant. I also recognized the landlord’s pattern of buying and holding; noting the “honeymoon”
phase of their beautiful new investment, I was able to negotiate a cap on operating expense escalations and even got my client Prop 13 property tax protection.
The great deal terms were embedded in the landlord’s unique circumstances. Why twist his arm when I can gently unlock his
imagination?
