ELI5 How to negotiate commercial real estate lease price at my dream price?
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[{"id": "cwfaqdk", "text": "I'm assuming you have data, no? What's your model say the place is worth? What do comps say it should be worth? ", "replies": [], "depth": 1}, {"id": "cwfat1s", "text": "Any help would be great. A prominent commercial real estate friend of mine said the waiting game is common. I just need to know what my next bid should be.", "replies": [{"id": "cwgnm0h", "text": "You should hire your friend to represent you so you dont fuck it up.  You sound like a know it all even though you are not in the business.  Landlords roll their eyes at tenants like that. If you want to secure the space hire a broker.  The landlord will pay his fee.", "replies": [], "depth": 2}], "depth": 1}, {"id": "cwfde0l", "text": "I'll take an opportunity to clear up some potentially flawed thinking that tenants often arrive at in these situations. One being that:\n&gt;we are the only bidders its been on the market for 1 year. \n\nThe other being:\n&gt;Owners of property are a publicly traded entity = really rich. Also this is probably the best plaza in my area\n\nIn the first case tenants often draw the conclusion that since the space has been vacant for so long, certainly the landlord would be eager to do a deal. Well in reality, this most likely means that they are very careful in who they rent to. This plays into the second comment, being really rich. They can afford to wait. They can wait and wait and wait. What benefit does the landlord possibly gain by dropping the rent by $10-$20,000? Furthermore, if they are a publicly traded, rich-ass landlord, then they are also very likely to be astute, financially savvy businesspeople, who have a very good idea of what kind of rent a certain business could handle given the AAA nature of the plaza's location. Why then would they give any discount to a no-name, first location franchise, with no proven business model?\n\nIn commercial real estate, tenants get a market discount when they can reduce the risk to the landlord. Since you aren't a multi-location brand with, 10+ years of proven results the only way you can do that is to increase the security you are vetting in the deal (go personal, letter of credit, big deposit, or some other form of secured asset). If you can't do that, simply playing the waiting game, probably won't change much.\n\n\n", "replies": [], "depth": 1}, {"id": "cwfjse1", "text": "They don't really want you in the center but would have you if you pay their ask. ", "replies": [], "depth": 1}, {"id": "cwfktcu", "text": "Sounds like you pissed off the landlord and they have moved on.  They are done negotiating.  Why aren't you using a tenant rep broker to negotiate on your behalf?", "replies": [], "depth": 1}, {"id": "cwfrcsn", "text": "What's the term? When I have tenants (especially new businesses) coming to me and we can't get a deal done I usually try to restructure the rent for them to make year one more palletable. Usually our annual increases are 3.5% or cpi whichever is greater. Instead sometimes I'll back load a three year term so year one is within their budget but annual increases are bigger. I also usually would much rather give a couple months free rent and keep the price per square where I want it than to lower the price per square foot even if the annual cost is the same.  This way I keep my average price per square foot high for financing purposes and similarly to what I said before it back loads the rent. Both ways help a tenant get on their feet and I don't get screwed out of rent long term. ", "replies": [{"id": "cwfx174", "text": "same here.  Provided a strong tenant who has good guarantees nearly all my clients would strongly prefer to do a higher lease rate and bleed some cash up front on ti or free rent.   We don't want low rents on the roll when refi'ing or selling period.  It makes renewals easier too if you don't have to do a big step up.", "replies": [], "depth": 2}], "depth": 1}]