What are the most common lease negotiation mistakes for corporate real estate clients?

As a property valuer/arbitrator and a person regularly dealing with lease disputes more often than not the clauses pertaining to disagreement post the exercising of the option, are more often than not clear enough and the process to follow somewhat problematic. Landlords and tenants need to ensure that if there is no agreement on the option rental what do they seek in arriving at a fair outcome. Furthermore they use the wrong professionals to assist them without realizing their limitations.

The research also needs to be done on the business you are running. You should know your demographics, what the trade area is, if there is enough workforce development to give you the ideal employees along much more. Next is to hire a broker that can actually help you find a location based on those needs. Too many brokers just put together puzzles. You need 5,000 sqft, they find 5,000 sqft with out any more thought that than. When you have someone looking at all the other aspects that will make your business successful, then that is the broker to hire.

Common mistakes in corporate real estate lease negotiations include inadequate research on market rates, leading to unfavorable terms. Failing to thoroughly review and understand lease clauses may result in unforeseen costs or restrictions. Ignoring future growth or contraction needs can lead to space inefficiencies. Inadequate attention to maintenance and operational responsibilities may cause disputes. Lastly, a lack of legal expertise can result in accepting terms that aren't in the company's best interest. Mitigate these pitfalls by conducting thorough due diligence, seeking professional advice, and negotiating with a forward-looking perspective to align the lease with your business strategy.

One of the mayor mistakes is using a market rate as the most critical indicator. The rate should be focussing on the cost/employee within a number of realistic scenarios of the company and the site (not its rent aloe) plays a important role is this ratio as the distribution in different sites can have different efficiencies that have to be taken into consideration. The market rate of the property is just one parameter more.

Clients looking to take up office and warehouse space is daunting, and normally out of their general day to day business. That is were experieced brokerages like Turnkey Commercial Properties can assist. This alleviates the pressure and time so that you as the client can focus on your core business. Their are various factors to consider when choosing a new commercial space. Is the rental in line with the market. Are their backup services in place. Is their a tenant installation allowance offered by landlord. Just some of the reasons you need assistance and hey "The Client doesn't pay Commission" - The landlord does.

Surprisingly, it's common for the corporate clients I've worked with to not have an absolutely clear strategy. To me, it's akin to a strategic blueprint in a business venture - it delineates objectives, priorities, and tactics. Without this blueprint, there’s a risk of losing focus, conceding more than necessary, or missing key deadlines. It’s imperative to establish clear objectives, comprehend the best and worst possible outcomes, and prepare a roadmap. This approach greatly assists in mitigating the risk of unfavorable outcomes. It also helps their broker(s) clearly understand the client's objective.

Having a clear strategy is essential for successful lease negotiations in corporate real estate. A strategy helps clients stay focused, prioritize their goals, and prepare for various scenarios. Without it, they risk losing focus, making unnecessary concessions, and missing deadlines. Combining thorough research with a strategic plan, and possibly engaging a professional broker, ensures better negotiation outcomes and avoids common pitfalls.

Simple Advice . Always choose a commercial brokerage who enjoys challenges and thinks out the box. Turnkey commercial properties loves these flexible challenges.

While I wish we could just cookie cutter all deals, we have to realize that no two properties are the same, no two developers the same. Each site must stand on its own and warrant the investment of time and money from each side. Flexibility is important!

Flexibility is important, but operating in a uncertain environment, as most of the companies, kills the flexibility. We should also focus on creativity and thinking out of the box in order to come up with different scenarios that must be studied with corporate management. Creativity is the "flexibility" of the future.

Corporate real estate clients should avoid three common mistakes in lease negotiations: Lack of Research: Without understanding market conditions, landlord motivations, and comparable properties, clients risk unfavorable terms. Hiring a professional broker can provide essential data and insights. No Clear Strategy: Clients need a plan outlining their goals, priorities, and tactics. This helps them stay focused and avoid unnecessary concessions. Defining objectives and preparing a negotiation roadmap are crucial. Inflexibility: Being rigid can lead to deadlock and conflict. Clients should remain adaptable, open to compromise, and willing to explore creative solutions.

I've had far too many Tenants not want to spend the money on an attorney. Thankfully, after being in the industry for 18 years, there are a few boutique attorneys offices that can represent Tenants without a massive check for their expertise in reviewing a Lease. We always recommend an attorney review.

If you do not have someone look at your lease before you sign it, you are far more likely to need someone like me- a commercial litigator, down the road when the problems surface. If it is not in writing, it might as well not exist.

I developed a strategy years ago of labeling ridiculously unilateral provisions as “sauce” provisions - what is sauce for the goose is sauce for the gander. If you get 30 day’s notice, I get it. If you want expanded attorneys fees, so do I - regardless of which party I am representing. People respond to appealing to a basic concept of fairness. So go find those sauce provisions and call them out.

With Commercial Property in South Africa it is paramount for a professional brokerage like Turnkey Commercial Properties help source and facilitate the transaction from beginning to end. When it comes to the lease agreement many lawyers focus on normal law with not having the necessary property knowledge and apply normal law to. This causes delays and excessive financial burden on the clients. Think before you ink.

One thing that I have found helpful when dealing with Tenants is to give them time to read the lease, ask them whether they have read the lease and understood it and whether they have any questions. Giving a Tenant peace of mind to ask any question is paramount in establishing and maintaining that relationship. Too often the Tenant feels pressurised so sign without reading and actually understanding what they are signing.

Having a contraction or expansion right in your lease. Your space use may change over time and Tenants will want to right to contract, expand, or even terminate their lease. Any Termination that a Landlord happens to agree to will have costs payable by the Tenant for terminating the lease. Use a good broker to help you weigh these costs.

One of the examples we faced that the landlord insisted on a higher rent per month to guarantee the revenues during economic uncertainty. Yet a revenue share model with minimum guarantee should have more lucrative revenues.

In today's uncertainty in the global market, due to new technologies, innovations, changes in regulation, etc. that appears continuously and every time more frequently, most companies struggle with planning correctly its strategy as nobody know exactly what changes will shake up the market. RE and FM projects, as renewing a lease or moving to another site, requires 12 to 24 months (depending on the companies size) from its ideation to its implementation. Quite a challenge, planning in today's dynamic business environments.

A common mistake that corporate real estate clients make is not planning for the future when negotiating a lease. A lease represents a long-term commitment that significantly impacts the client's ability to grow, adapt, or exit the premises. Without future planning, clients may encounter challenges, risks, or limitations that hinder their business objectives. To avoid this, clients should consider their potential future needs—such as expansion, contraction, relocation, or early termination—and negotiate flexible clauses that accommodate these possibilities. This foresight ensures that the lease remains beneficial and adaptable to the company's evolving requirements.

100%. At the end of the day, there are people on both sides of the table that have to give a little and take a little for a favorable outcome. If you're a good Tenant, pay rent on time, friendly neighbor, follow the rules and regs, your Landlord may be more giving on something when you need it - free conference room / parking for event on-site, deferred rental payment when pandemic happens.

Not allowing enough time to run a proper process. This is the biggest mistake we see corporates make. If you start speaking to your landlord about renewing your lease a couple of months before the lease expires, the landlord knows you do not have enough time to move out. They are, therefore, unlikely to offer you an attractive package of rent and incentives for you to stay, and you will be forced to accept whatever they put on the table. So even if you have no intention of relocating, your primary point of negotiating leverage is that you could get a better deal elsewhere.