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Follow these steps to gain MAXIMUM LEVERAGE in your Lease Negotiations
1. ACT EARLY!
Consider alternatives early. Depending on the size of your organization, this could be three years+ before a lease expiration. It serves neither you nor a landlord well in the long term if you make rushed, partially-informed decisions. And in a tight real estate market such as Seattle’s, make time your friend. Engage with a dedicated tenant rep as your advocate through the process
2. UNDERSTAND PRIORITIES
Understand your firm’s priorities and changes in your business’s and employees’ trends. Today’s employees see things differently than their predecessors. Work is increasingly social and collaborative. The balance between community space and individual space is changing; understand the trends and leave room for adaptability/flexibility in your solution. Ease of access to public transit or proximity to urban housing and lifestyle is increasingly important.
3. THINK CULTURE
Larger organizations should consider engaging someone who understands the dynamics of organizational development and who can help your firm determine priorities for what will likely be one of the more impactful and potentially most costly decisions you will make in any given fiscal year
4. UNDERSTAND THE MARKET
Understand the target real estate market and the compromises needed to meet your priorities. i.e. if you have a Seattle CBD headquarters and are considering where to locate a production facility, how important to management is the drive time between locations? Travel time might be 15 minutes drive to SoDo and 50 minutes to Auburn. On a good traffic day! How do you balance a 50% delta in rental/occupancy costs with the opportunity costs of travel time?
5. REALLY CONSIDER LOCATION
Know where your employees live. And how they get to work. We have the nation’s 5th most congested traffic, and, with over half a million more people projected to move to the region by 2030, access to good public transportation is paramount.
6. EMBRACE BEST PRACTICES
Understand best practices in the design and utilization of space. Hire a good space planner/programmer architect to provide the analysis and benchmarking data needed for a solid real estate decision.
7. BE REALISTIC / LEASE VS. BUY
Be realistic if considering purchasing vs leasing. While real estate ownership can be an appreciating asset over the long term, it can also be a liability if you have under- or over-estimated your requirements. Remember, real estate is illiquid and you should buy with a 15 year horizon in mind (to ride out the historical 6-10 year cycles of the industry)
8. THINK SLOW...
Analyze your alternatives objectively: engage ‘slow thinking’. Do not be swayed by your initial impressions and think instead of the long-term implications. Ensure that your future space has the essential characteristics for today’s and tomorrow’s business environment. Such as: sufficient clean power for evolving computing requirements, air cooling capacity for higher occupancy loads, access to natural light and adequate security systems. Force rank your business’s strategic priorities.
9. USE YOUR LEVERAGE
Negotiate from strength: even in a tight market, a well-organized tenant who presents themselves realistically and understands the realities of the market, is more attractive. Landlords are seeking to forge long-term relationships with stable and growing companies. Your ability to position yourself positively will have an impact on lease negotiations.
10. BE RESPECTFUL
Be respectful of landlords’ time and their product irrespective of market conditions. It’s human nature to want to deal with people who make the effort to be punctual and are appreciative of the space they are touring. The best negotiators tend to be polite listeners and seldom over-react even to unreasonable stances by those on the other side of the table. And, never bluff.