Takeaways from our training ‘Successful lease negotiations’

Last month, with Anthony Huygen from Transact, we examined why office tenants overpay on rent and how to address it. Here are our top five takeaways to help you negotiate better lease terms.

1. Use Intermediate Break-Options

Don’t wait until the end of your lease contract but use an intermediate break-option (e.g., after 6 years) as a negotiation leverage and claim a new ‘loyalty incentive’ for not leaving. The initial rent-free periods you got at the beginning of the lease contract were an incentive linked to the first ‘fixed’ lease period (e.g., 3 or 6 years). If you decide to stay (or better said: not to leave), you’re entitled to a new ‘bonus’.

2. Conduct a Market Survey
Don’t just ‘have a chat’ with your landlord but do a market survey and compare all your options, even if you have no intention of leaving. The stay-or-leave business case with the financial and qualitative comparison of all the scenarios will give you the insights you need for a well-prepared negotiation and it will allow your management to make an informed decision for the future.

3. Start on Time!
Develop your stay-or-leave business case at least 18 to 12 months before your break-option or end date. Tenants tend to reveal their ‘stay strategy’ by starting too late and leaving no time for a possible relocation scenario (which requires at least 6 to 9 months!).

4. Do the Maths from Your Landlord’s Point of View
Calculate at what lowest rent your landlord is willing to keep you as a tenant instead of running the risk of finding a new tenant.

5. Align Your Lease Period with Your Business Strategy
Since financial forecasting in most companies runs over 5 years, it makes sense to adjust your lease contract and sign a ‘5/7/9’ instead of a ‘3/6/9’ or a ‘6/9’. Not sure you’ll need the full surface in the next upcoming years? Sign a lease contract for 5 years fixed for 80% of the surface and 20% with an annual break-option instead of a ‘3/6/9’ for the whole surface. You’ll have more flexibility and far better lease conditions!

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