9 Negotiating Strategies for Reducing Rental Rates

Tenants should not be afraid to negotiate assertively on their rental rates. So why do tenants have such difficulty in this area?

Frequently, the answer is a simple unawareness of market rental rates (or the “going rate”) in an area.

Let us explain. Suppose the leasing agent or landlord wants you to pay $18 per square foot on new lease space (or even on a lease renewal). However, you know that every other tenant in the building is paying rent ranging between $11 to $14 per square foot. Armed with this information, you would have no difficulty justifying your negotiations would you?

Tenants often mistakenly believe that the agent or landlord wouldn’t dare ask for more rent than the space is worth. Consider, however, that the landlord is paying the leasing agent commission not just to lease the space, but to lease it for the highest rent possible – and to the best tenant available. Commercial landlords justifiably want to maximize the return on their real estate investments, which is entirely acceptable.

Here are nine strategies for lowering the rental rate on commercial leases:

Talk with other tenants in the building. You can learn a lot about the landlord’s property management practices, how tenants are treated, how approachable the landlord is and so on by approaching current tenants. Tenants will often tell you whether they plan to stay or move, if their rent is excessive and other inside information only existing tenants know about.

Shop Around. Even if you’re in love with one property, conspicuously seek out other options as it pays to create competition for your tenancy among several landlords in one geographical area. Leasing agents and landlords will often soften on asking rental rates when they realize you have sought out leasing options. Remember that you are the customer. Don’t hand the landlord your tenancy on a silver platter – make him/her earn it.

Let the landlord make the first offer. It’s much easier to negotiate when you see the business terms on paper. Suggest that the leasing agent or landlord handwrite, type or e-mail you the Offer To Lease. Typically the deal will never get worse than the first Offer or Proposal presented so you can measure your negotiating progress by comparing where the deal started and where it finished. Frequently, the first Offer is padded with room for negotiation – so never accept the first Offer outright.