Sticking to your guns in lease negotiations

It’s strange how often emotions can get the better of us, even in business.

People’s attitude when negotiating a property deal comes to mind especially. It is not uncommon when people are buying a home that they go over their budget when they find somewhere they really like.

Negotiating a commercial property lease is no different. I recently dealt with a case where a business was in negotiation for a great commercial property in a prime CBD location that suited them to a T. However, the property owner’s idea of its market value was over the top. At the last minute, another company jumped in and agreed to pay the owner’s price.

It was an irrational decision. The second company had locked themselves into a lease for 4 to 6 years that was easily costing them $20,000 more a year than they needed to pay. So over the duration of the lease, it was going to cost them a good $120,000 more than they needed.

That kind of extra cost in today’s tough economic times could end up making or breaking a business.

Property owners are going to be looking for maximum rent right now like never before. Anyone seeking a new property lease is going to have to be strong and well supported in their negotiations to get the best deal.

I find in times like these that the sort of advice we can offer clients is invaluable. It’s all about doing the thinking and doing the analysis to be crystal clear and totally dispassionate about the property you need and the price you can pay.