The Secrets to Real Estate Success: Part 5

“You don’t get what you deserve, you get what you negotiate.” – Chester L. Karrass

One of the biggest advantages of working with an experienced Broker is knowing where and how to negotiate, and not just on rent - but on the entire lease package. Landlords are often more flexible than many realize, especially when the market is soft.

When we say the market is “soft,” we mean there are more spaces available than there are Tenants to fill them. This can happen when the economy cools, businesses close or downsize, or new buildings add more space than demand can absorb. In these situations, Landlords have more empty space than they would like, and every empty space costs them money. That is when they are most willing to offer bigger incentives such as larger Tenant Improvement packages, more free rent, or larger rent reductions to attract and keep good Tenants.

We regularly negotiate to get concessions on three key items:

1. Tenant Improvements (TI) – Funds the Landlord contributes toward the build-out to customize the space to your needs.
2. Free Rent – Months where you occupy the space, but don’t pay base rent.
3. Base Rent Reductions – A base rental rate that is below asking, or as low as possible while still maximizing other concessions.

In our experience:

• TI can range from 40%–60% of your current rate.
• Free Rent can range from 40%–60% of your current rate.
• Rent Reductions can be 10%–45% in softer markets.

Here is how to estimate your savings:

1. TI Savings

• Low: Current rate × 40%
• High: Current rate × 60%

2. Free Rent Savings

• Low: Current rate × 40%
• High: Current rate × 60%

3. Rent Reduction

• Low: 10% off current rate
• High: 45% off current rate

4. Add them up

• Low total savings = TI low + Free Rent low + Rent low
• High total savings = TI high + Free Rent high + Rent high

Example: If your current rent is $5,000 per month:

• Low range savings = $2,000 (TI) + $2,000 (Free Rent) + $500 (Rent Reduction) = $4,500 Total Savings
• High range savings = $3,000 (TI) + $3,000 (Free Rent) + $2,250 (Rent Reduction) = $8,250 Total Savings

Bottom line:

Negotiation is not just about lowering rent. It is about maximizing the entire lease value. The right Broker can put thousands of dollars back into your practice. Let us put our expertise to work for you.