Top Tips for Negotiating Commercial Leases - #5 Create a Bidding War

Commercial Real Estate Agent with REATA Commercial Realty, Inc. Texas 537349

Scarcity is the basic economic problem that arises when someone has unlimited wants but limited resources. And guess what? Tenants are the resource that landlords want the most. I don't care if you are in Dallas, Plano, Frisco, Richardson or Tokyo. Landlords are the same. Tenants create value in their buildings.

So it's important to create a bidding war for your business. This requires that you have several lease alternatives (real or perceived) and that all landlords know that other options exist. Get proposals from each. Talk to them about certain features of other proposals you have been able to get. Even if some properties are not great options, act like they are.

And be sure to get a proposal from your current landlord even if you have a renewal option (see tip #3 & #4). Make sure he/she knows you are considering other options too.

Don’t tell any landlord that you’ve rejected their building until you have a fully executed new lease with the tenant's chosen property. That way they remain in play.  

Now I don't advocate wasting people's time. If a building isn't a fit and can't be made to be a good option, don't waste the landlord's time. As a tenant representative (tenant rep), I will often tell landlords that it doesn't look like their bulding is going to make the cut or the short list. They will invariably as why. That gives you the opportunity to give them some constructive feedback. Maybe their rental rate is too high or the construction allowance they are offering is too low given the condition of the space and your other options. You never know when they will find a way to sweeten the deal and get their building back in the hunt.

The bottom line is to make yourself a scarce resource that several landlords want.

Posted by




Bob Gibbons

REATA Commercial Realty, Inc. | 1211 E. 15th Street, Plano, TX  75074

972-468-1946 p | 866-439-8015 f | 972-984-8580 m |




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Ralph Gorgoglione
Maui Life Homes / Metro Life Homes - Kihei, HI
Hawaii and California Real Estate (310) 497-9407

What an excellent post! Thank you for sharing this post.

Feb 07, 2011 10:50 AM #1
Bob Gibbons
REATA Commercial Realty, Inc. - Plano, TX

Thanks a lot, Ralph.

Feb 08, 2011 09:40 AM #2
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