When it comes to negotiating a lease on a commercial property, leverage is the critical factor that can make all the difference to your subsequent leasing experience. So how can commercial tenants increase this all-important leverage and ensure they get the biggest bang for their buck on their commercial property investment? Read on to discover our tips for gaining leverage and negotiating like a pro.

1. Do Your Research and Know the Market

 

As with so many areas of life, knowledge really is power when it comes to lease negotiations. Having an in-depth understanding of the current market conditions and typical asking rates for similar properties will put you in a stronger position to gain leverage and negotiate fairly and effectively. For example, if you can back up your requests with current market data that supports your case, you’ll have a better chance of getting your landlord’s agreement.

 

Familiarise yourself with the asking rents of comparable properties and identify the reasons for their variables - do higher asking prices reflect the location or additional facilities like front desk service etc.? This will help you establish whether the quoted fee is in line with what the property has to offer.

 

In addition to researching the market, also check aspects such as the zoning laws for the area, so you can be sure you’re negotiating on a space that’s in the right area for your requirements.

 

 

2. Maximise the Competition

 

Making it clear that you are actively considering all viable market options will increase the perceived sense of competition on the part of the landlord, giving you additional leverage.

 

Just as you would with other investments, such as a luxury car purchase, it’s always a good idea to ‘shop around’. Scope out the available options and even request proposals from several landlords in order to determine how competitive the current market really is.

 

By testing the market in this way, you’ll gain a strategic negotiating advantage that you can use as leverage when it comes to finalising the lease details with your landlord.

 

 

3. Read All the Fine Print

 

While it may seem like this should go without saying, it can be all too easy to skip over the details in your eagerness to secure a lease on a property.

 

Commercial leases often contain complex clauses and detailed language that can be a little overwhelming, particularly if this is your first time negotiating on a commercial property. However, these finer details can have a significant impact on your leasing experience, so it’s essential everything is checked and checked again.

 

For example, the application of a non-compete clause may limit your ability to do business, while a single small detail such as a cap on inflation-indexed annual increases could save you from huge costs down the line depending on the state of the economy.

 

 

4. Get Clear on Costings

 

Before you begin negotiation proceedings, it’s essential you’ve gone over all the incidentals you’ll need to pay so you can be certain the total cost is within your budget. If needed, be sure to request clarification on any future increases on things like base rent and incidentals, so you can factor these into your future costings.

 

By having a clear understanding of your costs, you’ll be in a better position to establish how much room you have to move and where you need to cap your negotiations to avoid going over-budget.

 

 

5. Consider Where Your Flexibility Lies

 

When it comes to negotiating on a commercial lease, being flexible can make it a whole lot easier to steer proceedings in your favour. To do this, you need to determine where you can be a little more flexible, and where you need to stay firm in the best interests of your business.

 

For example, if it’s suitable for your business, you might gain leverage by opting for a longer lease term - this will benefit the landlord by removing the need to negotiate over a shorter term, which may result in lower costs for you. However, as with any negotiation, be sure to weigh up the pros and cons to avoid making a decision you’ll regret in the future.

 

 

If you’re currently searching for a commercial property, check out our property listings and get the inside knowledge to help you make an informed decision.

 

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