Inside a commercial lease landlord’s world

I write often about the benefits of working a good partnership between tenant and landlord.

Understanding the needs of each party can go a long way to negotiating a lease agreement that will benefit everyone. I can’t count the number of times I’ve worked with tenants and landlords to negotiate a solution that has been found by looking outside the square and working with alternatives that neither party had ever considered. The key is always for each party to gain greater insights into the other party’s needs.

Right now there are some very real challenges for landlords in the current market given the fact that vacancy levels are getting high.

Having a building fully occupied with tenants on long-term leases is worth a great deal to a landlord right now, and in fact the value of their property is always going to be a lot more than bricks and mortar; the cash flow from stable tenants adds significantly to a valuation.

This is why landlords are particularly keen to have tenants sign up for lease periods of up around 8 years, rather than for 2 to 3 year periods. When a tenant is in negotiation, it is worth bearing this in mind, that the longer term will significantly benefit the landlord, so you can ask for them to reciprocate in some way.

Likewise, as the market is under a lot of pressure right now, a smart business looking for a leased property will be thinking in the landlord’s world. There can be great benefit for landlord and tenant to join forces when hunting out a new property as guaranteed tenancies are a much more attractive proposition than vacant space.

Right now, I am getting approaches from developers wanting to match tenants to a site, and I do have some clients in mind. For a developer to go to financiers with guaranteed tenancies is a huge help in closing the deal.

So think laterally and see where deals can be struck from unexpected quarters.