When negotiating a lease, one of the critical skills needed to reach an agreement is the ability to persuade or convince the other party.
The art of persuasion is key to a successful lease negotiation as you need to be able to persuade the other party and get them to accept your position in the agreement.
But being persuasive isn’t just all about your personality and how well you can talk. It is also about being well prepared before you enter into the lease negotiation.
Follow these 5 tips to prepare for lease negotiations for retailers and this will put you in the best possible position to getting a fair deal every time.
Know Your Limits
If you are not in a decision-making position within the business you work for, ensure you’ve had a lengthy discussion with that decision maker before you go to the lease negotiation.
You need to discuss what your limits are. What are your alternatives or fall-back position?
This discussion is key, as you want to ensure that at the ‘negotiation table’ you don’t lose your position of authority. Having to defer to the decision maker mid negotiation will bring your credibility down and make it harder for you to continue negotiations.
It Must Be a Win-Win Situation
Always bear in mind that each party needs to get something of value out of the transaction.
Before going into the lease negotiation, think about the things you are willing to give up in the process. Go in armed with an A list, things that you absolutely cannot compromise on, and a B list, things that are nice to have but that you could compromise on.
And like with point 1 above, if you are not the decision maker in your business, make sure this A and B list is discussed with the decision maker before going into the lease negotiation.
Think About Your Position
Do you already have leases with this landlord that will allow you to negotiate on a portfolio level rather than a lease by lease level? Having more than one lease with a particular landlord gives you a wider scope in which to negotiate on.
Think about other leases you have coming up for renewal or potential new store locations offered by the same landlord and look at the negotiation more on a portfolio level than just one lease at a time.
Keep it Professional
Remember that this is a business transaction and that both parties are negotiating on behalf of a business and that it is not personal.
If you think tempers will flair during negotiations, try to bring yourself back to remembering that you are both just doing your job and that there is nothing personal about the decision being made, it is all just business.
However, if you are a small business owner, it can sometimes feel personal because your business is your livelihood. It’s at this time you should bring in a professional lease negotiator to keep the negotiations strictly business.
Negotiate Armed with Accurate and Up-to-Date Data and Information
The easiest and most important way to get your point across in a lease negotiation is by being armed with as much accurate data and information as possible.
Firstly, take the time to research the shopping centre or retail strip, find out what other retailers in that area are paying, how the centre has performed in past years and collate everything you find to take to the negotiations.
The LeaseInfo™ database provides you with all the data you will need when negotiating a shopping centre lease. A subscription to our database includes comparable lease data for shopping centres and select strips across NSW, QLD, ACT and NT.
Secondly, what do you know about this particular landlord? Research what other shopping centres they own, read recent news articles and see what they have recently been updating on social media. This should give you a good idea of their recent activity and performance.
Finally, who specifically are you going to be negotiating with? Have you had dealings with them previously? If not, do your research on them. Check out their Linkedin profile, see if you have any connections in common, ask around with other retailers about their experiences negotiating with them.
Remember the key to a successful negotiation is to be as prepared as possible. Arm yourself with as much information as you can gather. And always keep in mind that you are not the only one want to win the negotiation, compromise is key!
This post was authored by Simon Fonteyn. Simon is one of Australia’s leading experts in retail, childcare and medical leasing and rental valuations. He holds a Degree in Accounting & Finance, a Diploma of Valuation, a Masters of Management and is an Associate of the Australian Property Institute. With over 25 years experience in the commercial property industry, Simon founded LeaseInfo® as a way to provide more transparency to the industry.