Negotiating Tips

BlackEdelweiss

I am going to have to negotiate a rent deal with a landlord very soon as I need to finalise my financial details and get some equipment ordered, my only problem is that I am terrible at bargaining like this, I have no idea where to start without sounding stupid.
Can anybody give me some advice on this.
The estate agent mentioned a rent of around €17,000 for one of the premises I am interested in, he said these rents have been recently renegotiated and are half what they were a year or 2 ago.
I have been advised me to make a really low offer and work from there but I dont know how low to go at first.
I think it is because they have been recently reduced that I am confused, is it still ok to go in very low or are they now at a very low rate anyway and I should just aim for something very close to the asking price.
The unit is in a retail park, at the back end of it with not much passing traffic, it is not a huge estate so I think I can draw customers down there with a good level of advertising and word of mouth. The unit has been empty since the park opened apart from a brief stay by one client.
Because of this I think I am in a good bargaining position but as I said I am just not sure how low to go.
Would I just sound stupid if I said €10,000 a year for the first year, maybe going up to 12,000 in the second year? Should I just start at €14,000 or €15,000?
Any good negotiators out there that can help me out!

Heres a few tips that Ive used - mightnt be your cup of tea but it could help.

Usually Ill walk into the place and start pointing out as many things as possible I can see wrong in it, even if they are tiny things that dont matter. It will put the other person on the backfoot in terms of negotiation.

As Im walking around Ill be constantly saying the kinds of things that they want to hear, ie. I'm doing this that and the other here, I intend on getting a place and hopefully keeping it for 5-10 years. In other words Im a long term tenant with cash who is never going to cause you any problems.

Your issue is that you might be dealing with the estate agent, who isnt in a position to negotiate and will just relay info to the landlord. Best to meet landlord direct - as the agent doesn't want to drop the price too much as they will make less commission. If the agent refuses ask to meet both of them together.

You should find out how long the unit has been vacant for. Very important. If its a long time it gives you much more bargaining power. If its been vacant a long time, offer 10,000euro. Dont be afraid to take the piss. Essentially you need balls when your negotiating.
If you go in at 15K he will probably get you to agree on 16K. Go in at 10K and you might get it for 12K depending on how desperate the landlord is.
If its been vacant for 6 months plus, he is desperate so use that to your advantage. Remember its better for him to get 10K a month then nothing. He may well have a mortgage that needs paying on it.
Negotiate hard for an easy get out clause for yourself. Dont get tied into to long term contracts. Ask for one months notice and fight hard for it. You really dont want to be tied in for too long if things go belly up

Good luck!


By the way - "recently reduced" is just a pitch. Pretend you didnt even hear that!

BlackEdelweiss

The site I want has only been rented once that I know of and the center has park has been open about 4 years. I think the last tennant done a runner aswell. There are a few other bigger units still empty in the park aswell, all owned by the same developer I think.
I know this dosent sound like the best place to open a business but the park is becoming more popular with most of the towns shopping centering on this retail park and 2 others within walking distance.
If he is adamant about a certain price should I push for things like installing toilets or is that going too far?

Id recommend you push for as much as you can within reason. if you get a really good rental price from him, maybe you dont want to push it too far - that will depend on how ruthless you are!

Just dont be afraid to ask. If you see something it needs mention it.

Chipboard

First of all I would advise you to do some research on commercial rents in the area (local auctioneer websites, daft.ie etc). It will give you a base to start from and just knowing about the subject will increase your confidence "in the room". Auctioneers usually try to make you feel like they are expert and you know nothing. If you aren't able to stand your ground you'll be walked on. Remember when you look on daft that these are asking prices not what landlords are getting. Make sure the properties you look at are comparable in terms of location, parking, footfall, reputation, is their a good anchor tenant nearby. Discount the cheapest rent you see to 80% and aim to do better than that. Have a reason for your starting point.

If the person you're negotiating with is inflexible, tell him that that you have a groundrule, he has to be prepared to negotiate otherwise the meeting can end there and then.

Your negotiating strength is dictated by supply and demand. At the moment there is excess supply so your in the driving seat - don't let him forget that.

Don't look like you want the deal too much (even if you do). You have to appear like you don't care for it or you'll be raped.

If you get a chance to put him on the back foot do, but don't overdo it, don't walk around complaining about everything from the colour of the walls to the view out the toilet window, it gets predictable and if you annoy him by looking like a tyre kicker he won't be as pushed to conclude a deal.

Before you go in the room, know 1) your key wants in order of priority - top want will probably be price but maybe not 2) your bottom line and 3) compensators - things you will ask for when your close to striking a deal.

People like to win so its no harm to let him feel like he's getting a good deal as long as you know your are.

Don't be afraid of silence - when you say something shut up - if he doesn't respond immediately its because your doing well and he can't think of an answer apart from the one he doesn't want to say to you - if you keep talking it will take away the need for him to respond.

Appear confident.

If he appears too confident, manage his expectations.

Don't appear too happy with a concession he makes.

If he states something which is a key strength of his, don't let them keep regurgitating it throughout the meeting.

Don't be too quick to concede.

Don't let him impose arbitrary limits like "the landlord won't let this for cent under €20k" - the landlord is subject to the market like the rest of us.

Explore his other offers (are there any?).

Don't be fooled by a fake stalemate.

If you encounter a real stalemate, ask them to suggest a solution.

If you get entrenched on a particular issue try to park that issue and discuss other points, if you can agree everything else the difficult issue might start to look easier.

If all else fails ask yourself is this a real stalemate and then go to paragraph 6 point 2 above.

If he is becoming increasingly annoyed ask yourself

- are you are negotiating too good a deal?

- will he sign up to it after he has had a chance to sleep on it?

You may need to concede something without being asked to regain some goodwill (in your case this could be a soft issue like telling him you'll pay the rent every month by standing order and mow the green area outside too (you might have been going to do this anyway but why not throw it in as a sweetener).

Before you do this think carefully about how much you want this. Is the premises suitable? Some businesses are fine in a quite corner of a quite park, others need footfall, some need parking, some need a complimentary business nearby - it depends what the business is.

Retain a solicitor to vet the lease. You don't have to sign the first lease he puts on front of you. The wording of the lease is part of the negotiation (although this part will come after you have agreed the headline pieces like term, rent, break clauses, rent reviews etc). Your solicitor will be able to advise you on any restrictive clauses he may have included. Do you want to include any restrictive clauses. Maybe you sell petfood and you don't want him to be able to grant a lease in the same park to any other petfood retailer - stick it in if you can.

Good luck. Let us know how you get on.

BlackEdelweiss

Chipboard wrote: »

First of all I would advise you to do some research on commercial rents in the area (local auctioneer websites, daft.ie etc). It will give you a base to start from and just knowing about the subject will increase your confidence "in the room". Auctioneers usually try to make you feel like they are expert and you know nothing. If you aren't able to stand your ground you'll be walked on. Remember when you look on daft that these are asking prices not what landlords are getting. Make sure the properties you look at are comparable in terms of location, parking, footfall, reputation, is their a good anchor tenant nearby. Discount the cheapest rent you see to 80% and aim to do better than that. Have a reason for your starting point.

If the person you're negotiating with is inflexible, tell him that that you have a groundrule, he has to be prepared to negotiate otherwise the meeting can end there and then.

Your negotiating strength is dictated by supply and demand. At the moment there is excess supply so your in the driving seat - don't let him forget that.

Don't look like you want the deal too much (even if you do). You have to appear like you don't care for it or you'll be raped.

If you get a chance to put him on the back foot do, but don't overdo it, don't walk around complaining about everything from the colour of the walls to the view out the toilet window, it gets predictable and if you annoy him by looking like a tyre kicker he won't be as pushed to conclude a deal.

Before you go in the room, know 1) your key wants in order of priority - top want will probably be price but maybe not 2) your bottom line and 3) compensators - things you will ask for when your close to striking a deal.

People like to win so its no harm to let him feel like he's getting a good deal as long as you know your are.

Don't be afraid of silence - when you say something shut up - if he doesn't respond immediately its because your doing well and he can't think of an answer apart from the one he doesn't want to say to you - if you keep talking it will take away the need for him to respond.

Appear confident.

If he appears too confident, manage his expectations.

Don't appear too happy with a concession he makes.

If he states something which is a key strength of his, don't let them keep regurgitating it throughout the meeting.

Don't be too quick to concede.

Don't let him impose arbitrary limits like "the landlord won't let this for cent under €20k" - the landlord is subject to the market like the rest of us.

Explore his other offers (are there any?).

Don't be fooled by a fake stalemate.

If you encounter a real stalemate, ask them to suggest a solution.

If you get entrenched on a particular issue try to park that issue and discuss other points, if you can agree everything else the difficult issue might start to look easier.

If all else fails ask yourself is this a real stalemate and then go to paragraph 6 point 2 above.

If he is becoming increasingly annoyed ask yourself

- are you are negotiating too good a deal?

- will he sign up to it after he has had a chance to sleep on it?

You may need to concede something without being asked to regain some goodwill (in your case this could be a soft issue like telling him you'll pay the rent every month by standing order and mow the green area outside too (you might have been going to do this anyway but why not throw it in as a sweetener).

Before you do this think carefully about how much you want this. Is the premises suitable? Some businesses are fine in a quite corner of a quite park, others need footfall, some need parking, some need a complimentary business nearby - it depends what the business is.

Retain a solicitor to vet the lease. You don't have to sign the first lease he puts on front of you. The wording of the lease is part of the negotiation (although this part will come after you have agreed the headline pieces like term, rent, break clauses, rent reviews etc). Your solicitor will be able to advise you on any restrictive clauses he may have included. Do you want to include any restrictive clauses. Maybe you sell petfood and you don't want him to be able to grant a lease in the same park to any other petfood retailer - stick it in if you can.

Good luck. Let us know how you get on.

Cheers, if you put a bit of music to that it could be a new version of that "Wear sunscreen" song!:)

dh0661

Also negotiate for a "rent free" period for set up, fit out etc.

BlackEdelweiss

I made my first offer 7 days ago but I have still not heard back from the agent, what do I do now?
I dont think this is very professional but as I have no experience in this area I dont know if this is common. Should I approach the owner directly, I dont know him personally but I am sure I could get his number.

Red Sheds

Good advice there form Chipboard, use it, negiotate all you can and for what you can, free rent period, fit out costs etc etc. Also calculate the cost per square foot and compare with other rents locally as well. Dont be afraid to push and cite other cheaper examples etc, Remember its a buyers market right now. Some retail space can be got for as little as 20 - 30% of what it was making a few years back.

BlackEdelweiss

BlackEdelweiss wrote: »

I made my first offer 7 days ago but I have still not heard back from the agent, what do I do now?
I dont think this is very professional but as I have no experience in this area I dont know if this is common. Should I approach the owner directly, I dont know him personally but I am sure I could get his number.

Yes of course approach him directly if possible. Real estate agents can often be a shambles to deal with, so dont assume that they have even relayed your offer.

blue4ever

Have a plan 'b'!