Searching for the right location for a business, warehouse or retail shop can be arduous and time consuming, but simply finding the right space is not where the process ends. Negotiating the right terms into a lease can make or break a successful landlord-tenant relationship and save countless headaches down the line.
There are the obvious tenant concessions that a tenant representation broker should always work to negotiate into an agreement, but there are also some lesser known concessions that can sweeten the deal even more.
Looking Past the Obvious
There are some essentials that every tenant should have their broker negotiate. Some of those non-negotiables include a fair market rental rate, tenant improvements (and how high or flexible these can be), escalation, rent abatement, termination rights, renewal rights, rights to additional space if needed and so on. There is also an abundance of out of the ordinary concessions that tenants and their representatives can request, of which landlords are oftentimes happy to include. Tenants tend to fight over a nickel on the rental rate and forget about other concessions that could be worth thousands, like parking, free months of rent, renewal rates, and more.
What’s more, what is important and often overlooked within this basic level of concessions is identifying who will be keeping track of all of these. Sometimes saving dollars is as simple as making sure someone is double checking the construction oversight—double charges, mistakes, line items that didn’t need to be there. You cannot blindly trust that if these terms are agreed to or that the landlord will follow through if not prompted. Paying attention to details that no one else is can go a long way in adding up to savings. Follow up to make sure they deliver.
Unique Concessions for Unique Tenants
While there are basics that are important to every deal, the right concession packages are unique to every deal. It is imperative that the client’s needs are understood by their broker, so that concessions are balanced appropriately. While free rent may be important to one tenant, tenant improvement allowance (the amount a landlord is willing to spend so that the tenant can retrofit or renovate a space) may be far more important to another. While there are frequently requested concessions such as free rent, moving allowances, and delayed commencement, it is the job of the broker to identify the top concerns of their client and work toward securing those.
In the end, the job of a tenant representation broker is to make the process as easy and seamless as possible for the client. Allowing the client adequate time to focus on running their business, the broker mires in the details and keeps the landlord honest. A good tenant rep broker is someone who will take their fiduciary obligation to the client seriously. The broker should provide guidance on what can be achieved based on the unique goals of the future tenant and ensure negotiations stay on track. From timing projections and financial analyses to tax incentives and labor and demographics studies, the client should feel assured no stone is left unturned when it comes to tenant concessions.
John Heald is Senior Vice President, where he is responsible for brokerage activities related to tenant representation including new business development, client service, account management, lease audit, and financial analysis. A former U.S. Marine Corps Captain, John has a no nonsense mentality and solution oriented approach to problem solving. Since joining JLL in 2011, John has handled real estate transactions in excess of $45MM. Contact John.
Jeff Streep is Vice President for Brokerage Services, specializing in strategic real estate consulting for corporate clients in Orlando and throughout the state of Florida. He focuses his efforts on office product; assisting both users and owners of real estate to understand the multi-faceted real estate process from all angles. An Orlando native, Jeff has witnessed the tremendous growth of Orlando which helps him to exceed his client’s goals and expectations. Contact Jeff.