What are some effective ways to negotiate lease terms for a property with a unique location?

If you are looking for a commercial property to lease, you may encounter some that have a unique location, such as a waterfront, a historic district, or a prime spot in a busy area. These properties may offer some advantages, such as visibility, prestige, or customer attraction, but they may also come with some challenges, such as higher rent, stricter regulations, or limited availability. How can you negotiate lease terms for a property with a unique location that suit your business needs and budget? Here are some effective ways to approach this situation.

1 Research the market

Before you start negotiating, you need to do your homework and understand the market conditions and trends for the type of property and location you are interested in. You can use online tools, such as LoopNet, CoStar, or CREXi, to find comparable properties and their lease rates, terms, and availability. You can also consult with a commercial real estate broker or agent who specializes in the area and can provide you with valuable insights and advice. By doing your research, you can determine the fair market value of the property and have a realistic expectation of what you can negotiate.

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Adam Birzer

Adam Birzer: Seasoned eXp Commercial Real Estate Broker & Investor | Specializing in Self-Storage & Industrial Properties
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The most valuable service we can provide to our clients in commercial real estate is guiding them in making an informed decision between leasing and buying. This involves not only understanding their business needs but also meticulously breaking down the financial aspects for each option. For leasing, this means evaluating monthly lease costs against projected revenue and considering long-term operational costs. For buying, it's about analyzing mortgage payments, property taxes, potential for appreciation, maintenance costs, and tax advantages. By offering a clear, comprehensive financial breakdown, we empower our clients to make decisions that align best with their business objectives and future growth plans.

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Constance Kneule-Madden

Broker of Record at Constance Kneule-Madden New Jersey Real Estate Broker
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In my experience most commercial realtors will save you money by giving you an education on the different areas. If the realtor is spending time trying to find the right fit stay true to them and their efforts will pay off for you!

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2 Identify your priorities

Once you have a clear idea of the market value of the property, you need to identify your priorities and goals for the lease negotiation. What are the most important factors for you, such as rent, lease length, maintenance, improvements, or options? What are the deal-breakers or red flags that would make you walk away from the deal? What are the areas where you are willing to compromise or trade-off? By having a clear list of your priorities, you can focus on the key issues and avoid getting distracted by minor details or emotional factors.

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Ashley Dame

North Atlanta Real Estate and Home Improvement Services
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I agree with Constance. I’m of the mindset that it’s okay to be open about how much the property might appeal to the client. It can go a long way towards establishing a relationship with the agent or property owner. That being said, be open about what aspects don’t work as well. Having an agent who will advocate for your best interests and protect them should solve the problem about making emotional decisions.

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Constance Kneule-Madden

Broker of Record at Constance Kneule-Madden New Jersey Real Estate Broker
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I agree the emotional buyer will tend to make mistakes. If you like the property it’s ok to say that in your offer. It can help the negotiation

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3 Prepare your proposal

After you have identified your priorities, you need to prepare your proposal and present it to the landlord or their representative. Your proposal should include the main terms and conditions that you want to negotiate, such as rent, lease length, security deposit, rent escalation, maintenance, improvements, options, and incentives. You should also provide evidence and justification for your proposal, such as market data, financial statements, business plan, or references. Your proposal should be realistic, reasonable, and respectful, and show that you are serious and committed to leasing the property.

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Constance Kneule-Madden

Broker of Record at Constance Kneule-Madden New Jersey Real Estate Broker
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Remember that just as you have now got some prospective on the market the landlord definitely knows their market so don’t offend them by showing them something that isn’t in the same league.

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4 Listen and respond

Once you have presented your proposal, you need to listen and respond to the landlord's feedback and counteroffer. You should be prepared to answer their questions, address their concerns, and explain your rationale. You should also be open to hearing their perspective, understanding their needs, and finding common ground. You should avoid being defensive, aggressive, or emotional, and instead be calm, confident, and professional. You should also avoid accepting or rejecting their offer on the spot, and instead ask for time to review and analyze it.

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Constance Kneule-Madden

Broker of Record at Constance Kneule-Madden New Jersey Real Estate Broker
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An example of how to respond is. I have reviewed your counter offer and would like a couple days to let it all settle in. I expect to respond with any questions in a few days and look forward to moving to a final proposal.

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5 Negotiate and finalize

After you have reviewed and analyzed the landlord's counteroffer, you need to negotiate and finalize the lease terms. You should focus on the areas where you have mutual interest and agreement, and try to resolve the areas where you have differences or conflicts. You should use your research, priorities, and proposal as a guide, and be flexible and creative in finding solutions. You should also be respectful and courteous, and maintain a positive and cooperative relationship with the landlord. Once you have reached a satisfactory agreement, you should review and sign the lease contract, and celebrate your success.

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Constance Kneule-Madden

Broker of Record at Constance Kneule-Madden New Jersey Real Estate Broker
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And remember that in the long run if the property is good for your business don’t get stuck on the small stuff. Once you’re into your new location your business will profit and you will be happy

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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What are some effective ways to negotiate lease terms for a property with a unique location?

1

2

3

4

5

6

1 Research the market

2 Identify your priorities

3 Prepare your proposal

4 Listen and respond

5 Negotiate and finalize

6 Here’s what else to consider

Commercial Leasing

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What are some effective ways to negotiate lease terms for a property with a unique location?

1

2

3

4

5

6

1 Research the market

2 Identify your priorities

3 Prepare your proposal

4 Listen and respond

5 Negotiate and finalize

6 Here’s what else to consider

Commercial Leasing

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