Lease Negotiating Factors, Part 3: Final Considerations

Great credit is widely considered the best way for a prospective tenant to go to the front of the line for competitive spaces. Security deposits can vary widely from three – twelve months and without strong financial credit, a landlord may even require a personal guarantee depending on the cost to modify a space. On the other hand, some landlords simply choose to pass on making a deal with a tenant who has poor credit.

Generally, landlords become most competitive when they believe a tenant can act decisively to occupy space within six months. In light of permitting and construction time for alterations, as well as the actual negotiation of the lease document, landlords consider three months the fastest for an expedited move, and six-to-twelve months more common for larger organizations.

In conclusion, the primary goal of the majority of landlords involves maximizing the future value of their investment and secondly, improving near-term cash flow. Since the future value of a building depends on the rental stream plus the tenants’ credit, your best negotiating strategy may be to seek concessions via “free rent,” alterations, and upfront reimbursements. By doing so, you will be effectively lowering the average rent on a long-term basis