Making sure the sweeteners in property deals don’t go sour

Some really creative solutions are coming out of the woodwork as businesses look for new ways to encourage people to lease or buy property – sometimes as a matter of sheer survival.

There have been a few post-crunch casualties; some deciding to leave their respective industries in all fields from real estate to engineering, architecture, construction and associated trades.

Some designers have been caught short putting time and energy into building projects only to find the bank has pulled the plug on the property developer and plans have ground to a halt.

For many, all of this means a change in direction. Fewer companies are prepared to do freebies as a precursor to securing a contract. Businesses can no longer rely on work turning up and are having to go prospecting and up the ante in their sales processes. Commercial lease tenants and landlords are both finding themselves having to take a hard line in negotiations.

Ultimately, deals are still being struck but all parties have to find more creative solutions to close a deal. There are many sweeteners and incentives about. For the most part these are not dodgy, but one needs to carefully assess whether the incentives offered are really going to benefit your business.

It is a bit like being sold a package deal for your computer with software and many other gadgets thrown in, some of which you may never use or that are not of great quality.

Some of the useful and interesting incentives around are simply creative alternatives; like an example in the United Kingdom where a property vendor raffled off their property to generate interest. Here we have seen property developers offer incentives such as $1,000 travel vouchers to real estate agents if they can sell commercial space in their developments.

It has definitely shifted to being a tenants’ market in the property lease field. We’re seeing offers of rent holidays, fit-out contributions, friendly terms & conditions in lease documents, all with the aim of securing a deal.

The key is always to determine if the sweetened deals are right for you in the long term.

Sometimes the incentives are hidden and you need to be street smart – to know what to ask for – to benefit. It’s a bit like a game of cards where you are upping the bid, and having the discernment to know how high to bid. For tenants and landlords alike, it is important as I have said before to consider each other’s needs to get a deal across the line.

My advice is as always; get expert support when you need it to analyse the fine print.