When it comes to a landlord’s consideration in negotiating real estate terms with prospective tenants, does size matter?
In theory, yes.
A larger company that takes up more space in a building has more leverage over the landlord because they represent a larger share of the building’s cash flow and profit. They also provide the building a higher occupancy, allowing the landlord to charge more to other tenants. In addition, the better the reputation a company has, the more other tenants will want to follow them into the same property.
However, in reality, the answer is no.
Size shouldn’t matter with the right broker who is truly representing your best interests. With a smaller company, the same large-tenant benefits are possible through a proactive and strategic approach. If a company is smaller, it is especially important to first get hold of a trusted and recommended real estate broker or negotiator who knows the business. This broker should have the experience required to understand the market and have or get comps for prior or current deals made by larger companies in the building. Because the broker has significant information on the matter, thus providing the client with the leverage needed, the client will get a result just as good as a large tenant that has an importance in size.
Most importantly, a smaller tenant should find a broker to work with that really cares about their client’s best interests and will negotiate the best deal possible. Oftentimes, smaller real estate firms that specialize in working with smaller clients will be best suited to prioritize those smaller clients and might in fact have more skin in the game. This is especially true if the smaller firm works with a lot of repeat clients and cares about client referrals.
With a solid broker who has the best experience and knowledge, and who cares about the client, a small company can still have the best deal, regardless of size.