Situation: A company in a competitive real estate market has about 50% more space than they need at $2.80/sq. ft. per month – full service. The lease is up in 5 months with an option to renew for 2 years on the same terms. The company wants to both reduce its space and to reduce the cost per sq. ft. by about 25%. What’s the best way to renegotiate a lease?
Advice from the CEOs:
- Gather information from multiple sources on current and forecasted cost of space in your market. Sources may include: other tenants, real estate agents, similar buildings, and walking the neighborhood to evaluate conditions. Look at newspaper ads and Craig’s List for both space & furniture.
- Ask other tenants in your building whether have excess space that they would offer to you under favorable terms, or whether they are interested in your excess space. In either case ask for both price and terms.
- Be careful with the information that you gain from real estate agents. They have more incentive to keep prices up than to find you the best deal. Balance their information with information that you gather from other sources.
- Success in negation often is a matter of which side is best informed. Line up all of your options. Present these to your landlord and see if you can get what you need without having to move. For many landlords, a good tenant at a lower price is better than no tenant.