Companies often represent themselves in office lease negotiations – especially lease renewals – but using a tenant representative is usually a better option.
Recently a director of a financial services firm in Sydney approached TRS for assistance with their office lease renewal negotiations.
The landlord would not budge on the negotiations, but the director wanted a better deal. Could TRS help?
We accepted the challenge, and using TRS’s 6-step lease negotiation methodology, our Transaction Management Director was able to achieve an additional $170,000 of savings, above what the director had negotiated with the landlord.
This is just one example of the many times TRS has negotiated a better deal than a tenant was able to negotiate themselves.
If you’re thinking about negotiating your office lease yourself, please consider these 4 good reasons why working with a tenant representative (tenant rep) might be a better option:
1. Creating leverage with landlords
Like it or not, leasing office space entails a negotiation and negotiations are all about leverage.
It is nearly impossible to get the best deal in an office lease negotiation without leverage, which is created by having multiple options in the market.
If you limit yourself to just your current property, you’re at the mercy of the landlord.
Since most landlords negotiate on a regular basis, it’s easy for them to know when you don’t have other viable options.
Simply telling your landlord you have a proposal from another landlord won’t give you strong enough leverage.
Tenant reps are experts in leveraging the value of your tenancy against landlords and their agents.
They often do this by creating competition amongst landlords – even if their client is intending to stay in their current space.
This critical step incentivises landlords to make better offers in the hope of keeping or landing you as a tenant.
To maximise leverage you need professional representation, the right timing, an understanding of all available options, and a strategic game plan for what you want to accomplish.
2. Save time & stress
Office lease negotiations can be time-consuming and require substantial resources. Handling negotiations independently can divert valuable time and attention away from core business operations.
By engaging a tenant rep, tenants can delegate the time-consuming tasks of researching properties, arranging property tours, reviewing lease documents, and engaging in negotiations.
This allows business owners and key executives to focus on their core competencies, ultimately maximising productivity and minimising distractions.
3. Cover the entire market
Tenant reps have extensive networks of industry contacts, including property owners, landlords, agents and other tenant representatives.
This network provides valuable access to off-market opportunities, insider information, and potential synergistic partnerships.
Their connections can open doors to exclusive deals and facilitate smoother negotiations by leveraging established relationships with landlords and agents.
4. Avoid expensive pitfalls
Commercial lease agreements involve legal and financial complexities that can have significant implications for tenants.
Misunderstood clauses, unfavourable lease terms, or inadequate due diligence can lead to costly disputes, legal issues, or financial burdens.
Tenant reps work closely with legal advisors to ensure lease agreements align with tenants’ requirements and protect their interests.
They thoroughly review lease documents, identifying potential risks and recommending appropriate modifications to safeguard tenants’ rights and minimise liabilities.
Also, tenant reps help tenants avoid hidden costs or unexpected financial obligations.
They can scrutinise the financial components of the lease, such as operating expenses and common area maintenance fees, to ensure they are fair and reasonable.
But what about the tenant rep’s fee?
It’s true you will have to pay for a tenant rep’s services. But the savings an experienced tenant rep can generate usually far outweigh their fees.
And that’s not taking into account the savings in time and stress!
By doing 90% of the legwork, a tenant rep allows commercial tenants to focus on their core business activities, while leaving the negotiation to the experts.
Don’t go it alone!
While it may seem tempting to represent yourself in office lease negotiations, the potential risks and missed opportunities far outweigh the perceived benefits.
Engaging TRS brings expertise, market knowledge, time savings, access to networks, negotiation skills, cost savings, and risk mitigation to the table.
With our specialised knowledge and experience, we can secure you the most favourable lease terms, protect your interests and set up your business up for success.
To find out more about how TRS can help negotiate you a better deal on your next lease renewal or office relocation, please contact us
