Here’s When You Should Walk Away From a Deal


Here's When You Should Walk Away From a Deal-min

Negotiating a deal for an office space, home or retail space is a delicate art that takes thoughtfulness, precision and a clear idea of what you want. Walking away from a deal is not only the best leverage to get everything on your list of asks, but can also be necessary if the deal is headed in a direction that’s not in your best interest. Here’s how you can determine when it’s time to walk away.

When You Lose Focus of Your Original Goal

When looking for a new office space, it’s not uncommon to get caught up in a particular space or location and get lost in the idea of it. For instance, perhaps you’re on the hunt for a new office space in an attempt to shorten the commute for your employees. In the process, you happen upon an office space you love at a reasonable price, but it’s nowhere near where most of your employee base is located. If the original goal was to alleviate the commute for your team, and you end up looking at a potential office space that isn’t in alignment with that, no matter how nice it is or how many amenities it may boast, it’s best to take a step back and reevaluate why you decided to search for a new space in the first place. This is also the type of thing that can happen when you are looking to save money by reducing your square footage, but then start looking at nicer and higher class properties than you were in before. If the per square foot price becomes higher than you were paying before, you may end up taking a smaller space without any real cost savings.

When the Risk Far Exceeds the Potential Gain

Searching for the perfect location can be exhausting, especially when you have a large list of necessities. After a few less than impressive viewings you might be tempted to start to lower your standards. If you find yourself in a position where there are a laundry list of maintenance issues or you’re not 100% comfortable with the lease term the landlord is insisting on, it’s better to err on the side of caution rather than taking a risk that may negatively impact you in the end.

When It’s No Longer a Win-Win Scenario

If a potential landlord is using your interest in the property as a bargaining chip in their favor, rethinking the deal and even walking away from it could be in your best interest. For example, if the person on the other side of the negotiation gets emotional, is making threats, or is lying to you, this should tell you that you do not want to get further involved with these people even if the property you found hits all of your wants and needs. Remember, this will potentially be your landlord for years to come. In this situation it’s also beneficial to work with an experienced broker to ensure that you aren’t being taken advantage of in the negotiation process or setting yourself up for a frustrating leasing situation.

At the end of the negotiation process, you should feel good about the deal you signed, and by utilizing your ability to walk away, you can ensure that your lease and space are both tailored to your exact needs.

How to be a Better Negotiator


Commercial Real estate agent and customers shaking hands together celebrating finished contract after about home insurance and investment loan, handshake and successful deal. 5 Reasons to Work with a TAG Broker

The negotiation process can be intimidating, but it doesn’t have to be if you go in with the right attitude and information. Whether you’re looking to increase your salary, restructure part of your lease or save money on that new car, follow the tips below to get what you want and feel good doing it.

Know the market. When negotiating, specificity is key. Hone in on exactly what you want, and then provide reasons why you should receive it. For instance, when negotiating a higher salary, look up standard industry salaries for your position and take note of how your salary reflects that. Hard statistics strengthen why you deserve additional compensation. From there, put together a comprehensive list of your accomplishments, any projects you’ve managed and any initiatives you’ve been part of within your company, as well as any relevant outside qualifications you have. Use your hard work as leverage. A negotiation is never a time to sell yourself short.

Don’t be afraid of no. Ideally in your negotiating process you’ll get exactly what you walked in for, but the best negotiators also already have alternatives in mind. It’s essential for you to go into your meeting under the impression that you will receive your requests, but also find a few alternatives to your original offer that you would be happy with. For example, if you’re buying a home, but the realtor is not willing to budge on price, try asking for some repairs or upgrades to be covered instead. No matter what you’re negotiating, having a counter offer prepared will help ensure a successful negotiation.

If your boss doesn’t want to raise your salary and the conversation is stagnating because neither party will budge, you can offer up other ways in which you can be compensated. Try requesting benefits such as extra PTO, a gym membership or an end of year bonus. When you look at your total benefits and re-frame your requests from that perspective, your odds of a successful negotiation are much higher.

Listen. When the person you’re negotiating with is speaking, listen carefully. By asking open-ended questions and utilizing active listening, you’re setting the stage for an actual discussion instead of just a bargaining match. The more time you take to listen rather than just waiting to reply, you can get a better understanding of where the other party is coming from, and you can adjust your negotiating tactics accordingly.

The best way to successfully negotiate is to be mindful throughout the entire process – from the time you take to properly research before the meeting to the meeting itself. With the proper information and a good attitude, you’ll be able to take on any negotiation confidently and successfully.

The Best Negotiations Come from a Complete Commercial Real Estate Team


Commercial Real estate agent and customers shaking hands together celebrating finished contract after about home insurance and investment loan, handshake and successful deal. 5 Reasons to Work with a TAG Broker

Negotiating the terms of a commercial real estate lease is difficult, as it is fraught with jargon, clauses and paperwork, and even the slightest misstep can have dire consequences for a business’s bottom line. Hiring the right real estate broker and attorney team to handle this delicate process is the best way to guarantee the most favorable terms while saving you time and money.

They Understand the Industry

Too often, a business owner will request help in negotiating lease terms from an attorney friend or a neighborhood real estate agent. However, these professionals may not be familiar with the industry-specific ins and outs of a commercial real estate lease. A dedicated real estate attorney/commercial broker team will review the terms of the lease with expert eyes, navigating the provisions and clauses to establish the final document.

They Can Ask for More

Real estate is a hyper-local specialty, meaning an experienced commercial real estate attorney/broker team is going to have market knowledge regarding tenant improvement allowance and rent abatement. The team will understand where to push back and what is fair for the market. This will result in a far less contentious negotiation, establishing a good rapport with the landlord from the beginning.

They Can Strategize

There are many ways to “get more” out of your lease, and only professionals working in the industry would even know to ask. For example, the lease renewal clause is a point of concession that can greatly benefit your lease terms down the line. A commercial real estate attorney/broker team will work together to create a plan that will include more than simply lower rental costs.

When working with Tenant Advisory Group, we have access to a deep bench of quality connections, including top-tier real estate attorneys to help achieve the best results possible.

What’s in a Lease? Part 1.


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The best way to navigate the tricky landscape of a lease is to stay current on all the common phrases, clauses and definitions. You may have a general understanding of the terms, but it takes a professional to really navigate the ins and outs. Here are a few of the most common points you may encounter in your Chicago office space search.

 

  • Letter of Intent: The purpose of the letter of intent is for both parties to come to agreement on various terms before spending significant resources and legal fees in pursuing an acquisition. Double check the business terms agreed upon in the Letter of Intent are the same as those outlined in the lease document. You’ll want to make sure you receive everything that was promised.
  • Sublease Clause: A sublease clause outlines the terms for when you transfer all or part of your lease to another tenant while you remain on the property. When negotiating a sublease, reasonable consent should not be withheld by the landlord. The landlord will also ask for 100% of profits, but a 50/50 split is fair. Try to minimize the notice you must give, as well as the response time from your landlord to allow you more flexibility. Consent isn’t always necessary.
  • Holdover Clause: A holdover occurs when a tenant continues to remain in possession of the leased property after the lease expires or terminates. The holdover clause specifies if a holdover can occur and at what rent. Landlords will ask for 200% of your monthly rent; however, 150% is the market standard. The clause itself should make clear that the tenant is not holding over unless they’re staying after the term ends without notifying the landlord and gaining permission. When negotiating the holdover clause, there are a few items you will want to have clearly stated in the lease: length of the lease; termination of lease; rent amount; and liability for damages.
  • Renewal Clause: A renewal clause will attempt to automatically renew your lease unless you submit a notice. This clause is something you need to know about as a landlord may ask for automatic renewal without having to give you notice. It’s nice to have the rights to a space, but it is also nice to have the freedom to move. If you plan on staying, negotiating for renewal is a great opportunity for you to negotiate for a new rent rate.
  • Work Letter: The work letter is an addition to a lease outlining the stipulations for all improvement work done by the landlord, and what work will be completed by the tenant at their own expense. This should be monitored closely to make sure everything matches up with what the landlord promised. If there is an allowance, base building items should be taken care of by the landlord, and if the landlord has ongoing construction, make sure the landlord is liable if improvements aren’t completed by the agreed upon date.

 

Negotiating a lease is the most crucial step when moving into a new building, and can potentially save you a significant amount of money. Armed with the new knowledge of these phrases, words and definitions, you’ll be ready to tackle any upcoming lease negotiation.

Chicago’s South Loop is Red-Hot, Here’s Why


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Bowtruss Coffee, Portillo’s Hot Dogs, even Bernie Sanders. Between businesses and notable politicians, it seems as if everyone is flocking to Chicago’s South Loop neighborhood and setting up shop.

In the late “˜90’s, industrial speculation drove the South Loop’s real estate market. Today, it’s no doubt becoming one of Chicago’s hottest multi-family, commercial and retail markets. We’ll even say it’s on its way to become the next River West or Fulton Market hot-spot, and here’s why:

Students: Chicago is a bustling vibrant city, and it’s easy to overlook the impact of college students in the Loop area. Downtown, alone, is home to over 38,000 full-time college students, and there’s been a corresponding rise in student housing development and sales in recent years.

Surge in multi-family population: Zillow predicts the South Loop will be Chicago’s second “hottest” neighborhood in 2016. With downtown, lakefront, Museum Campus, Grant Park and Columbia College all within walking distance, the South Loop makes an ideal location for anyone looking be near it all. And, as professionals from the Loop look to work and play close to home, developers are rushing to fill this need for more housing. If you’re in the business of recruiting or hiring temporary talent, being located near colleges is perfect for your industry.

Transit and retail development: With the area’s growing residential population, there comes a surge in transit and retail development. Several bus lines run through the area that’ll easily connect you to all areas of the city. Not to mention, the number of El and Metra train stations nearby. With so many transit options, people living in the neighborhood will have an easy time commuting into downtown or any of the outlying neighborhoods like the West Loop, Lakeview, Fulton Market.

Neighborhood shopping and dining is also flourishing. The shops at the Roosevelt Collection seem to grow day by day. Take for example, when the Roosevelt Collection was sold to Prudential for $222M last August, it was already 93% leased with retailers such as Victoria’s Secret, Container Store, Banana Republic and a 16-screen Kerasotes multiplex. It probably goes without saying, but having access to so many restaurants in the area gives businesses and their employees plenty of options for networking lunches and business-related entertaining.

The South Loop market shows no signs of slowing as there’s just so much redevelopment and new developments heading to the area. And one of the best parts to this, is that in the meantime, there are still wonderful lease deals to be had at very affordable prices compared to the very tight markets of River North or River West! The key to finding them is to work with an experienced advisor in the area. Working with a broker or agent who knows the ins and outs of a city, will have access to many of the best hidden deals.

Lastly, working with an advisor means you can be sure you’re getting the best and fair price, and terms for your business – most important when it comes to finding spaces in these “hotter” markets. Keep this in mind as you consider your next move in the Chicago market.

 

Infographic: How to Negotiate the Renewal Option in Your Lease


Read the original post here.

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Negotiating the Renewal Option


 

 

Most commercial leases typically run between 5- 10 years. In good leases, there are provisions to the rental agreement allowing a tenant to extend the length of the lease. A general rule of thumb: Instead of immediately exercising your renewal option, try to negotiate each renewal term instead. However, if you come to a standstill, you should have a safety net of something already negotiated ready for your protection. This is especially true if your location is critical or if your business is difficult to move. Here are my three quick tips to negotiating this most important feature in any commercial lease:

Always negotiate the renewal clause in the original lease

The new rental rate for a renewal period can sometimes work on a predetermined basis, as mentioned above. It is more likely however that a renewal clause will state that a fair market value be used to determine a new rate. While renewing automatically may sound easy, make sure to check spaces around your area in order to get a good idea of what other spaces are going for. Knowledge of the market and comps are both key when negotiating.

Stipulate the rate from the beginning

The fair market value itself should be carefully discussed and defined. Never let the landlord try to interpret what the FMV should be. Make sure that the FMV is defined as including items such as the tenant improvement allowances or concessions you might find from the landlord’ competition. When you are able to stipulate a specific rental rate for the renewal option, you protect yourself. If the market is higher than your renewal rate, you’ve already locked in the lower renewal option rate. If the market is lower than the renewal option rate, you are still able to try and negotiate the renewal rate down.

Know how to ask

Typically, concessions (or leasing incentives) include free rent and tenant improvement dollars. Business owners are sometimes shocked to learn that these concessions are also potentially available on lease-renewal terms.

Many times, landlords tend to take their existing tenants for granted. What many long-term tenants can negotiate is the cost to acquire a new tenant. Realtor fees, background checks, and potential lost monthly rent all add up – don’t be afraid to use your long-term, immaculate renting history with your landlord as leverage.

Of course, you have to know how to ask for incentives to get them; the landlord won’t graciously offer them out of goodwill.

Consider hiring a trusted broker in your area

Even if your company is somewhat familiar with the market and rental negotiations and believe you have someone with the time to properly manage the re-negotiation- you should still consider representation through a professional services firm that can help negotiate you the best deal.

Tips to the Negotiation Process


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Real estate negotiating can either be an exciting or stressful process. If you are a broker you must have ice in your veins and know the people you are dealing with. Fortunately, if you are a third party, this allows you to be much more objective and take the emotions out of it. Viewing the other side of the deal as your partner (rather than your adversary) is a way to get started on making both sides happy. Here are a few tips to think about while negotiating.

Allow for Multiple Outcomes

Successful negotiators recognize that there is not merely one outcome that best suits both parties. There are many different ways for you and the other side of the table to meet in the middle. No matter the negotiation, maintain an open-mind about different processes that can bring you together for a compromise. As simple as this may sound, too many negotiators get locked into their one ideal solution and do not let themselves stray from this thought process. The essence of a negotiation is that both parties come to a satisfactory conclusion, and this can only happen if both sides allow themselves to open up to other possibilities.

Listen Before You Speak

The first terms thrown out in a negotiation will be the extreme highs and lows, with the final numbers landing somewhere in the middle. Keeping this in the back of your mind; let the other side throw out the first offer and then use that information to help you make an educated counter offer. Generally speaking, you can understand a lot about what the other side values most by just paying attention to their first offer. The first person to lay down their cards naturally loses some leverage by having to show some of their hand. Listen and comprehend what they tell you and parlay this information into a quality counter offer, rather than blindly throwing out an offer first.

Cooler Heads Prevail

The entire negotiating process is as much about emotion as it is money. In the 1987 movie Wall Street, Gordon Gekko told Bud Fox to never get emotional about a stock. Of course that movie is a far cry from dealing with negotiating in real life, but some of it does hold true. You have to understand that negotiating can be a slow, painstaking process, but if you let emotions cloud your decision-making, then it will make your life much worse. Take a step back every now and then, and try to enjoy the process – the more rational you are, the better you will do.

Silence is Golden

Once you have made a counter offer, be quiet. This is a very hard point to get across because the negotiating process can be a stressful one. Everyone wants instant gratification, however this should not be the expectation after delivering a counter offer. Once this process is under way and your bid is out there, there is no need to say anything else – your silence will speak volumes. If you put out a bid, and quickly follow up with instigating questions – or worse yet, try to make your bid more favorable – your competition has the upper hand. This can be difficult, but if you have presented your position in a clear and concise manner, then it is time to play it cool and wait for an answer from the other side.

Don’t Ask, Don’t Get

This is something that rings true in all walks of life – if you fail to ask for something, how will you know if you can get it? Afraid that your bid is too low, your lease term is too short, or offering price is too high? Why not give it a shot anyway? Ensure that you are not insulting the person, but at the same time, you will not be able to achieve your ultimate goal of getting the best deal without at least offering it up. In summation, to gain something, you have to ask for it.

If you have ever been in a room with a car salesman, you know they love negotiating. They have tons of experience and are able to keep it cool. The same goes with brokers – they are the experts and typically have many years of experience. If you follow these rules, hopefully you will be able to see the enjoyable side of negotiating.

Establishing Trust in Negotiation


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All businessmen and women know that a baseline of trust between parties is critical to the success of any negotiation. But within the course of business dealings, how do you build that trust? What active steps can you take to raise the chances of a positive outcome for both sides? Instead of simply hoping that your personality and that of the other party mesh well, go out of your way to make your next negotiation flow smoothly.

Here are a few key action items that, if handled well, can set a positive tone for a great business meeting.

Transparency

Being guarded with a lot of information is a quick way to ruin a potential negotiation. Open up to the other party and inform them of what you are looking to get out of this resolution. This is not to say that you have to divulge any and all trade secrets to every new business partner. However, sharing your overall goals for the process will open up the lines of communication and make sure all other efforts are not fruitless.

Tone

The tone of the meeting is extremely important and also very malleable. Your body language and the pace that you set can be determining factors in how comfortable it feels on the other side of the table from you. Allowing emotions into a negotiation often carries a negative connotation. However, bringing positive attitude and connecting emotionally to your counterpart is essential to developing a strong bond of trust. Actively listen to what he/she is looking for and show an eagerness to bring both sides closer to a compromise.

Timing and Location

Seemingly minute details such as the time and location of a negotiation can actually add up to a success or disaster depending on how well they are handled. Try and find a time that both parties will not be interrupted by the endless distractions that professional (and personal) lives can attract. Ensure that both sides have blocked out this time, as these distractions can innately create a more stressful environment. Along with the right time, find the right place. To help establish trust, either defer the location choice to the person you are meeting with or choose somewhere that will be convenient and comfortable for everyone.

 

5 Tips to Be a Strong Negotiator


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From the seasoned lease or contract negotiator to the first timer, it is vital to have a strong set of ideals behind all negotiations. The more confidence in and acumen with these skills that one has, the higher opportunity for coming away with a positive outcome.

At Tenant Advisory Group, negotiations are a part of everyday life and these are key reminders that have to stay top of mind throughout any negotiation to be successful.

1. Information

Information is the key to any successful negotiation. The more you have, the better position you will be in to achieve your goals. Put yourself in the best position by doing quality research and knowing all you can about the scenario.

2. Leverage

Gaining leverage allows you easier access to achieve your goals in the negotiation. Often times, leverage can be found by gathering more information. This points to tip #1, if you have information that either the other side does not have or that they think you do not have, then the leverage has been shifted in your direction.

3. Fairness

You never want to take every penny off the table. Leave a little something for your opposition in a good faith showing of being fair. You may end up crossing paths again and you want to be able to pick up where you left off, which is successfully completing a negotiation. Part of a successful negotiation is ensuring that neither side gets the feeling of being shortchanged, which could lead to resentment. Get the best deal, without being greedy.

4. Maintain Calm Demeanor

It is very important to never raise your voice. The purpose of yelling and screaming is to get someone to listen more closely, but it actually has the opposite effect. If you raise your voice, people will stop listening and progress will be halted. When negotiations become shouting arguments, nobody wins.

5. Understand your Adversary’ Motivations

Understanding what your opponent’ goals are makes the accomplishing of your goals that much easier. Often times, the two sides might have varying definitions of success, making attainment a far greater possibility. If both sides can feel this success without conceding too much, then that is an ideal negotiation.

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