Author: Coralie Clément September 2009
How to preparean effectiveLease Negotiation?
FOCUS ON CASH
PLAN
THE FUTURE …
DEFINE YOUR SPACE
REQUIREMENTS
TARGET THE RIGHT
LOCATION
> 4 Key Tips
> Define your
Space Requirements
3
List your Technical requirements: - Electrical needs- Communication needs (Data room)- Special H.V.A.C.
Get a clear understanding of your requirements in terms of:- Sqm/Sqf (capacity)- Design- Parking spaces- Storage
Detail your expectations regarding:- The Level of Services
(reception/lift/..)- Maintenance & Repair- Security & Power usage
Select your spacedepending on:- Sustainability- Infrastructure for
Disable people
=> Sustainability has an impact on your corporate i dentity & positivelyimpact the community & environment
=> You can increase innovation by designing facilit ies that allow innovative process
Define your rent budget=> $/sqm
> Target the right LocationTarget the right LocationTarget the right LocationTarget the right Location
4
Location:- CBD/outside- Distance to customers/competitors- Distance among company sites & businesses- Free Trade Zone (Tax Incentive)- Access to Public Transport- Catering facilities / Nearby amenities for employees- Image rating based on building attributes
Branding:- Roof/Exterior Signage rights - Use of company logos & colours in workplace design- Do you want an office with a view important?- Do you target highest or lowest floor?
=> Promote Marketing by selecting locations that at tract the customers & createworkplace that supports the brand
=> Seek location convenient to employees to increas e satisfaction & productivity
> Focus on CashFocus on CashFocus on CashFocus on Cash
5
Reduce One-time costs & Expenditures
> By negotiating:- Fit out / instalments- Landlord LHI incentive- Rent free- Rent payment terms
> By reducing- $/Sqm/Year- Rent overlap (for relocation)- Deposit impacts
=> Adapt your strategy depending on your financial condition by calculating Discounted Cash Flow, IRR & Payback for each available options.
> Plan the FuturePlan the FuturePlan the FuturePlan the Future
6
Keep the flexibility to reduce/dispose or grow the space:
- Negotiate Break option with/without penalties- Negotiate the right to reduce the space through Assignment, Sublease, Surrender- Allow Future growth through Expansion Option
Negotiate the right to do tenant improvements & changes in premises (expansion/reduction) and be aw are of your reinstatement clause
Adopt Flexible Lease period with renewal option
Reduce lock in period & termination/renewal notice
Be sure that the landlord notice in case of sales a llow sufficient time to relocate
Be ready for Rent reviews (annual index or agreemen t)
> ConclusionConclusionConclusionConclusion
7
Begin the process early.You need time to research the alternatives, negotiate the lease, manage change in premises, relocate… Allow a generous amount of additional time for unexpected delays in the leasing process and government authorities depending on the country.
Understand the local standards & specificitiesTo do so, you must liaise with your broker and conduct a full market research
Once properties have been short listed- Set goals & anticipating the counterparts’ goals- Avoid any conflict of interest & fraudulent behavi our- Understand the background of your Landlord
It will help you in the Lease Negotiation. - Define yourself a few lease options & be ready to d o
compromise
Make sure that the property fits and supports the b usinessand not the other way round.