3 Tactics to Expect in Landlord Negotiations

Landlords Play to Win—So Should You

When a doctor negotiates to obtain office space for their practice, they are usually working at a disadvantage. Healthcare tenants often focus on patients and staff, rather than the dollars. Landlords, by contrast, make a living by understanding negotiations, strategy and how to win.

When landlords win, they make a significant amount of money. Their annual income and net worth are impacted by each negotiation. That means landlords often do everything they can to gain an advantage.

While every negotiation is different, here are three approaches that landlords often employ to gain the upper hand in a real estate transaction.

#1 Manipulate, Intimidate and Lie

Many real estate agents are willing to get aggressive when it comes to negotiating. They might tell you that they have another tenant interested in the space or that they don’t negotiate with real estate agents. You might hear them say, “we never do that for any tenant.”

Their objective is clear: isolate the tenant in an attempt to eliminate the expert advisor and then get the tenant to stop pushing for the best possible terms. Once they accomplish that, a landlord can say whatever they like to get the tenant to sign.

For the landlord, the benefit is obvious. They stand to make tens of thousands—sometimes hundreds of thousands—of dollars. Imagine if you said something that was completely subjective and arbitrary to meet your needs, and were rewarded with a check in the amount of a hundred thousand dollars? When you look at it that way, it's not hard to understand why landlords do what they do. They are trying to win.

#2 Treat You Like a Friend

Whether the landlord is your patient, offers to take you golfing or makes other overtures, their friendly demeanor must be filtered through the lens of the competitive landscape. Any friendship must pause when a negotiation starts.

This is similar to professional sports. Off the field, pitch, rink or court, many players are friends. But when the whistle blows, they are competitors and it is understood that all will do everything they can to win. They may shake before the game and hug afterward. During the game, friendship is paused.

So it is with your landlord. You can be friendly, but set appropriate boundaries.  Landlords love to become patrons, clients or patients of their tenants. It provides them an obvious reason to frequent and inspect their properties, support their tenant’s success and, most importantly, to blur the lines that delineate whose side they are really on.

The landlord’s hope is often to make the tenant too uncomfortable to bring in an expert advisor who knows the market and can avoid the traps.

#3 Compete Respectfully for Your Business

Of course, every tenant would prefer this response, but most landlords will not start here unless several conditions exist:

  • The tenant has professional representation
  • The tenant is educated on the current market
  • The tenant has multiple options that have been fully vetted
  • The landlord stands to lose a significant amount of money if the tenant walks away from the deal
  • The tenant simply will not be taken advantage of or disrespected

When these key elements are in place, most landlords will stop manipulation and intimidation tactics, drop the “I thought we were friends” line, and will simply work with the tenant’s agent to complete a deal. The landlord still wants the “win” of getting the deal finished. The risk of losing that deal is way too costly at this point to continue trying to capture extra money.

The quickest way to bring about this response is to secure professional representation. This is the same approach used by most publicly traded companies: they engage a market expert to protect them, educate and advise them, negotiate on their behalf and help them to obtain a favorable outcome.

Whatever approach a landlord takes, an expert agent can level the playing field, save you a significant amount of time and money, protect your interests and bring you peace of mind. Your agent can take the hits the landlord would otherwise throw at you and then hit back to give you a more favorable position.  In a contest where you only get one crack at your opponent every 5 to 10 years, make sure you don’t get knocked on your back.

CARR is the nation’s leading provider of commercial real estate services for healthcare tenants and buyers. Nitra cardmembers get a free lease evaluation.  Visit CARR.US to learn more.