Have you heard that before, from your Landlord?
Are you considering signing a Lease without negotiating the terms? Think twice before making a costly mistake! In this eye opening case study, we reveal the hidden pitfalls of blindly accepting Lease agreements and showcase how savvy negotiation can save you a fortune. Don’t fall victim to unfair terms and missed opportunities. Discover the power of negotiation and ensure you get the Lease you deserve. Get ready to unlock the secrets of Lease negotiation success in this captivating case study!
Imagine the frustration of Jessica*, a seasoned Tenant who has leased the same space for years. With her Lease due to expire in the next 12 months, she approached the Landlord, to ask about a renewal and the possible terms, expecting a fair and transparent process. However, instead of receiving an offer with terms to consider, Jessica found herself presented with the final Lease documents prepared by the solicitor, conveniently ready for her signature.
In this gripping narrative, we delve into Jessica’s unnerving experience and unravel the hidden dangers of Lease renewal without transparent terms. The Landlord’s decision to bypass negotiations and thrust a final Lease document upon her is an arrogant tactic of the Landlord that leans on the imbalance of unfair Landlord power, leaving Tenants vulnerable and susceptible to unfavourable conditions. This scenario is more common than you would think!
Join us as we shed light on Jessica’s predicament and expose the critical need for transparent negotiations during Lease renewals. Discover the vital role that a Lease Negotiator played, in securing a new Lease for Jessica on terms that worked for her.
Jessica understood the power of a Lease Negotiator, from when she had sought assistance to gain rent relief during the COVID pandemic. Drawing on that experience, Jessica recognised the value of enlisting expert advice once again and immediately called her trusted leasing consultant. In this case, that was us at Your Leasing Co!
Jessica knew that in the complex realm of commercial Lease negotiations, she would experience anxiety and uncertainty, if she tried to negotiate the Lease on her own. With the guidance of a specialised Tenant Representative, Jessica knew that the power dynamics would shift. Equipped with market data and negotiation expertise, the Tenant Representative will level the playing field, removing any unfair advantage held by Landlord.
Following a phone call with Jessica, we gained a comprehensive understanding of the situation and her objectives for a new Lease.
Promptly assessing the current market rent, we then presented Jessica with a proposed response to the Landlord, which was in line with what she needed to achieve for the business and what was fair considering the market conditions.
Upon submitting our offer to the Landlord, negotiations commenced, marking the beginning of the negotiation process.
The Landlords response was one of surprise, saying to us that had they known that the Tenant was going to negotiate, they would not have gone to the trouble of preparing a new Lease. This is just another way of the Landlord saying that they expected the Tenant to just sign without any negotiation! Again, not uncommon and often a way for a Landlord to successfully secure terms which favour their position only.
Jessica felt a sense of relief as she now had a seasoned leasing expert on her side, someone she could trust to advocate for her best interests and negotiate on her behalf. With Your Leasing Co’s guidance, she aimed to secure an agreement that aligned with market trends and affordability, rather than simply accepting a new Lease with a 3.5% rent increase. This allowed her to refocus on her business, free from worries about the impending Lease expiry.
We managed to negotiate a great deal for Jessica, securing a favourable commercial outcome that exceeded her expectations.
Jessica’s starting position was…
- A new Lease with a 3.5% rent increase on the existing rent
- All other terms were the same
- The Landlord simply prepared a new Lease to keep it “straight forward” and to make it easy to be able to be finalised quickly
Where did Jessica’s deal end?… a $45,000 SAVING
We were able to negotiate…
- A Rent Saving of $45,000. $9,000 per year, over 5 years, taking the rent back to a level it was at 5 years ago, compared to a 3.5% increase on the current rent, that the Landlord was asking!
- Limited Personal Guarantee. Unlimited personal guarantees are often a pre-requisite for commercial Leases. Negotiating the limitation of the existing unlimited personal guarantee that had been in place for many years, means that the security over the premises is now limited to the three month Bank Guarantee and the directors of the company only have personal exposure up to the value of three months rent, under a limited Personal Guarantee, making it unlikely that the Landlord would seek to sell personal assets to recover any loss.
Jessica was thrilled by the savings and the improved position, feeling like a weight had been lifted off her shoulders, after handing over the stress of the Lease negotiation to a seasoned professional. With a deep understanding of the market, we were able to provide an objective assessment and exceed the Landlord’s expertise in leasing, providing Jessica with a sense of confidence, that she had achieved the best deal possible, without losing one night’s sleep!
Your Leasing Co. specialises in being a Tenant Representative and negotiating Lease terms for commercial Tenants. If you have any questions about negotiating the best outcome for your Lease renewal, you can call us for a free, no obligation conversation on 1300 356 702.
*Our clients name has been changed to protect privacy. Contact us if a reference to this case study is required.