When Times are Tough the Tough Keep Negotiating
or, How to Get the Deal Done
History has proven that there are good and bad times. It’s also been proven opportunities exist during those times. Experience has taught me that if there are motivated principals, most times the transaction can be consummated if the parties keep negotiating in a civilized and professional manner.
When personal emotions get involved in a transaction, opportunity that was available is lost. Later on the parties look back and wonder, “How did I let that happen?”
It is extremely important during challenging times to keep a positive mental attitude, be creative, flexible, understanding and intelligent.
It is very helpful to understand the motivation of both parties in order to help facilitate a win-win transaction for all sides. When I speak about creativity, I’m thinking about going outside of the traditional box. What areas are important for both sides?
In a recent transaction, a client was moving into a building that could possibly pose a potential parking problem if the business grew substantially. A simple yet effective method was to negotiate a certain number of parking stalls that would be designated and marked for my client’s use. By doing this, the occupant was assured that they would have a minimum number of stalls in order to accommodate their employees. We then had another area identified as a potential location for future parking stalls. On the surface it seemed like this building would not work, however by being creative we made it happen.
Another transaction included a landlord that wanted to sell their building. I had negotiated an
aggressive lease package and at the 11th hour the landlord came back and wanted to increase the lease rate. They wanted to do this to maximize the value of the building for financing purposes on the increased sales price. We were agreeable to increasing the lease rate provided the overall effective rent stayed the same over the lease term. We negotiated an equal amount of free rent which was provided to the tenant up front; this helped the tenant with cash flow and we also created a cap on the operating expense increases due to a sale. The parties were both creative and flexible which provided a win-win solution.
Sometimes just staying in business is important for the respective parties during tough times.
Negotiating the transaction which allows consistent cash flow for the owner and also provides the tenant with an aggressive rent may motivate them to stay. This creates a win-win transaction during challenging times in the market. An example of diligently negotiating a transaction includes the renegotiation of a client’s lease where the space was approximately 25% larger than they needed. The tenant was prepared to move in order to reduce its occupancy costs by that 25%. The owner of the project did not want to lose the tenant, especially during these tough times, so through a series of negotiation we were able to structure a transaction that worked for both parties. The tenant received rental abatement on a portion of the space for a period time, did not need to relocate, and was provided an adequate amount of tenant improvement dollars to refurbish the space. The landlord kept a quality tenant in their project and limited their down time and cost exposure, another win-win transaction. By keeping a positive, professional and flexible attitude, tough negotiations can get the deal done.
