The Lease Coach: March 2019

8 easy negotiation tactics to find, get and maintain a lower rental rate on your bakery lease

Bakery tenants should not be afraid to negotiate assertively on the rental rate. So why do bakery tenants have such difficulty in this area?  Frequently, the answer is a lack of awareness of market rental rates (or the “going rate”) in an area.

Here are eight strategies for lowering the rental rate on commercial leases:

Talk to other tenants in the building.  You can learn a lot about the landlord’s property management practices, how tenants are treated, how approachable the landlord is. Tenants will often tell you whether they plan to stay or move, if their rent is excessive and other inside information only existing tenants know about.

Shop Around. Even if you’re in love with one property, conspicuously seek out other options as it pays to create competition for your tenancy among several landlords in one area. Leasing agents and landlords will often soften on asking rental rates when they realize you have sought out other options.

Let the landlord make the first offer. It’s much easier to negotiate when you see the business terms on paper. Suggest that the leasing agent or landlord e-mail you the Offer To Lease. Frequently, the first offer is padded with room for negotiation, so never accept the first offer outright.

Flinch. No matter what rental rate you’re offered, act surprised that the rent is so high. If you look visibly relieved or even pleasantly surprised by how reasonable the rental rate is you can be sure it won’t come down.   

Ask for justification. Ask what other tenants are paying, specifically those who have recently moved in or renewed their leases. This is called the prevailing rate. Don’t stop asking questions there. Inquire about the incentives they received. How many months of free rent or how much tenant allowance money did the landlord give the tenant?

Wait to counter-offer. When you receive the leasing agent’s first Offer to Lease don’t counter-offer right away. If you have no fear that the space will be leased to someone else it can often work to your advantage to wait a few days. Agents know that tenants can be influenced by artificial deadlines. When making your counter-offer you can provide a separate letter stating your terms, or by changing the original document, initialing the changes, signing it.

Walk away from the negotiating table. If, after receiving the landlord’s most recent counter offer, you determine the terms will still not work for you, advise the landlord or their agent you are going to take some time to consider it further or explore other options. We have effectively done this for our clients and seen the rental rate drop by more than $10 per square foot from the landlord’s original asking price.

Offset the rent with other incentives. Sometimes the landlord won’t budge on the rental rate. This is not the end of your negotiations. Frequently the landlord will concede other incentives such as free rent or more tenant allowance dollars in order to achieve his/her rental goals.

For a complimentary copy of our CD, Leasing Do’s & Don’ts for Commercial Tenants, please e mail DaleWillerton@TheLeaseCoach.com.

Dale Willerton and Jeff Grandfield – The Lease Coach are Commercial Lease Consultants who work exclusively for tenants. Dale and Jeff are professional speakers and co-authors of Negotiating Commercial Leases & Renewals FOR DUMMIES. (Wiley, 2013). Got a leasing question? Need help with your new lease or renewal? Call 1-800-738-9202, e-mail DaleWillerton@TheLeaseCoach.com or visit www.TheLeaseCoach.com