Tips for Negotiating Your Office Lease

Close up of a man wearing a long sleeve blue shirt signing his office lease using a black pen..

Whether you are looking to lease new office space or your current lease is set to expire, negotiating favorable terms is a must. Just as landlords want to make the most out of their commercial real estate investment, meaning hefty rental rates, it is in your best interest to negotiate a price point that makes sense for your business. Your office lease can be a large part of your company’s overhead expenses, so lease negotiations can play a major role in the future success of your business.

  • Minimize overhead costs
  • Provide location stability
  • Protect your business needs
  • Negotiate tenant improvement (T.I.)

Negotiating Favorable Terms For Your Office Lease

Office lease negotiation can be a complicated process with serious ramifications for your business both now and in the future. That’s why We’ve compiled several lease negotiation tips to help you along the way.

#1 Read the Fine Print

An office lease is a complicated legal document. It can be tempting to just skim the document, look at the rental rates, and sign your John Hancock on the dotted line. However, when small aspects are overlooked, they can become major issues down the road. Read every line carefully and be sure to have an attorney review the document as well.

#2 Shop Around & Research the Market

Remember, knowledge is power. Even if you have no intention of leasing a different location, it can be incredibly beneficial to compare the rental rates of nearby offices. This not only gives you invaluable market data, but can also be a powerful tool in negotiations. If you come to the table with in-depth market data, the landlord and/or landlord representation broker will know you mean business. It can also increase the sense of urgency on their behalf, because they don’t want to lose a potential tenant to another landlord.

Don’t forget to also look into local zoning laws to ensure the office space will work for your business needs.

#3 Understand the Landlord’s Perspective

Even though you are trying to negotiate office lease terms that make the most sense for your business, it’s also important to take a step back and look at things from the landlord’s perspective. The lease has to make sense for the landlord, as well. So, be sure to listen to where they are coming from.

  • Be professional and respectful. Don’t come into negotiations with a win-at-all-costs mentality. If you disagree with an aspect of the current lease, bring it to the landlord’s attention in a respectful way.
  • Be flexible within reason. Lease negotiations are about give and take. It is unlikely you will get absolutely everything you’re looking for, but you also shouldn’t just rollover. Be flexible, but know what you need to get out of these negotiations.
  • Don’t be afraid to make a counter offer. If you don’t like the terms outlined by the landlord, make a counter offer. Don’t get angry. Stay calm and present your case.
  • Think long term. If you are easy to work with and don’t try to strongarm negotiations, the landlord will be much more willing to work with you again and listen to your concerns in the future.

These strategies will help ensure both parties are happy with the final lease, and will help lay the groundwork for a healthy working relationship, which can be a powerful bargaining chip during lease renewal. 

#4 Use a Commercial Real Estate Broker

For starters, hiring a commercial real estate broker to negotiate the terms of your office lease won’t cost you anything. Almost every lease deal has a paid commission built into it, funded by rental dollars. So, if you choose to forgo hiring a tenant representative, you actually won’t save any money, but you will give up considerable leverage.

Hiring the right broker gives you leverage you need to negotiate the best possible deal.

  1. Often, landlords and landlord representation brokers prefer to work with other brokers, rather than individual business owners. In many cases, your broker may already have an established relationship with the landlord or landlord broker. 
  2. Brokers know the Maryland commercial real estate market inside and out – the landlords, the properties, the buyers and sellers.
  3. Brokers have access to industry knowledge – up-to-date market data, databases, and tools that track industry trends, vacancy rates, and comparable properties.

All of this means that your broker will be well-positioned to negotiate on your behalf and help ensure that you don’t end up paying above the current real estate market.

United Development Realty Specializes in Office Lease Negotiation and Renewal

United Development Realty is a Commercial Real Estate Broker in Maryland specializing in office lease negotiations and renewal. We begin by listening to your vision, your objectives, and your goals. Then, once we fully understand your business and its unique needs, we work with you and the landlord to negotiate terms that make sense for your business both now and in the future. Furthermore, we take the time to guide you through the lease evaluation process to ensure you have a full understanding of all your options before we proceed.

Please call our office (locations in Bethesda 240-221-1976 and Fells Point 410-522-1632) to get in touch with a licensed tenant representation broker today.

About Charles Peacock

Over the past 30 years, Charles has been involved in Maryland real estate sales & leasing, property management, real estate investment, and the construction industry. He is a licensed commercial real estate broker, specializing in the representation of both tenants and landlords, as well as medical and dental professionals. Charles has also represented several medical building owners.