How to negotiate leases with Fortune 500 Companies

In business, you are always negotiating. We may call it many different things — raising money, leasing space, selling, buying, hiring, etc. — but regardless of the form …

In business, you are always negotiating. We may call it many different things — raising money, leasing space, selling, buying, hiring, etc. — but regardless of the form negotiation takes, it is important to recognize the process for what it is.



One of the big problems people have with commercial real estate is the complexity of the deals, and being overwhelmed when dealing with companies a lot bigger than you are.



Here are some tips to help you negotiate better:



Remember why you bought the location you own. Chances are once moving expenses are factored in, and potential loss of clients (for retailers), the move will not be profitable for your tenants. 



Be Prepared



Do all the necessary research several days, if not weeks in advance, to make sure you fully understand who you are negotiating with. What are the company’s values and growth strategies, what do you offer that fits in with their overall corporate strategy? These are questions you need to be offensive in answering.



Know Your Bottom Line



Determine what you want before coming to the table. To get what you want, you’ve got to know what you want, and be able to articulate your goals clearly. Mentally, go through the negotiation process rehearsing potential rebuttals from your tenants or potential tenants. Justify the value you are presenting to them and their company.  



Set Your Goals High Enough




You can’t expect to make a deal without making concessions, so start high. The higher your aspirations are in the beginning, the more you will likely end up with at the closing of the negotiation. Ask for more than you expect, otherwise you may get less than you deserve.



Listen and Acknowledge




The role of a good negotiator is to listen to and understand what others are saying. As a listener, you are gathering information that is vital to understanding the needs and perspective of the other party. The better your understanding, the more flexibility and creativity you will have to create options. After all, you can’t make an intelligent response to a need or objection that you do not understand. One other benefit to listening, is that the discipline to focus on other opinions can also give you the chance to reflect on the process and strategy — ultimately making you a more effective negotiator.


Avoid Emotions



Negotiation is a process — one that can easily be manipulated by human egos and emotions. The more emotionally attached you become to a desired outcome, the harder you will try to achieve it. Pretty soon you will begin to lose perspective. Make sure each party understands the other’s perception of what is involved. Separate the people from the issues to avoid personalizing them.  



Be Prepared to Walk Away



If you become too eager or desperate, it can be difficult to negotiate objectively. Control of the negotiation belongs to the party who is perceived to need the deal the least. When you care the least at the negotiating table, you have the most strength.



Negotiate in Good Faith




When you start negotiating, remind yourself that you want this agreement to work satisfactorily for everyone involved. It’s better to focus on how you can both win. Additionally, show compassion by listening for the real reason behind their objection or hesitation. Let them air their feelings, make comments, present objections and feel comfortable telling you whatever is on their mind. Then, and only then, will all parties come to the negotiating table in good faith.



Be Patient




My relatives are Asian (known worldwide to be the best negotiators). The reason for this is that they do not talk very much. They simply let the other party talk themselves into a corner. Just because you are not hearing from your tenant, this is not necessarily a bad thing.



Negotiation is a fact of life. To be successful you must remember that everything is negotiable.  Many people find negotiation to be rather intimidating, thus shortchanging themselves because they fail to engage in the the process. Negotiation can be fun, empowering and enjoyable for both parties.



Remember there are no absolute rules in negotiation — every principle has an exception.  



Finally, effective negotiation should result in meeting the needs of both sides, while preserving the relationship.

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