How to negotiate with a landlord

Before you even start looking at properties, it's critical to have a clear understanding of your office space requirements and priorities. This includes things like:

• Square footage and headcount projections
• Preferred office layout (open plan, private offices, collaborative spaces)
• Location and accessibility
• Parking and transportation
• Technology and infrastructure needs
• Sustainability and wellness features
• Budget and timeline

Having a well-defined set of criteria will help you evaluate properties more efficiently and negotiate more effectively. You'll be able to quickly identify which spaces come closest to meeting your needs and where there may be room for compromise or concession.

While it's important to advocate for your own interests in any negotiation, it's also helpful to consider the landlord's perspective and motivations. What are their primary goals and concerns? Are they looking for a long-term stable tenant, or are they more focused on maximising short-term revenue? Do they have any particular constraints or challenges with the property that could impact your ability to negotiate?

Understanding the landlord's position can help you craft a proposal that addresses their needs while still achieving your own objectives. For example, if the landlord is concerned about the cost of tenant improvements, you might offer to amortise those costs over the lease term in exchange for a lower base rent or more favourable renewal options.

No office space is perfect, and even the most attractive properties may have certain deficiencies or drawbacks that could impact your use and enjoyment of the space. These might include things like:

• Odd-shaped or inefficient floor plates
• Low ceiling heights or obstructed views
• Outdated or insufficient building systems (HVAC, lifts, etc.)
• Lack of amenities or services
• Suboptimal location or accessibility
• Poor transport lines
• Poor EPC or sustainability accreditations

Rather than simply accepting these limitations, you can use them as leverage in your negotiations with the landlord. For example, if the space has an unusual layout that makes efficient space planning more difficult, you might ask for additional tenant improvement allowances.

Once you've identified a property that you're interested in pursuing, the next step is typically to negotiate the basic business terms of the lease, often referred to as the "Heads of Terms" or "Letter of Intent." This is usually a non-binding document that outlines the key provisions of the lease, such as:

• Rent and escalations
• Any rent-free period
• Lease term and renewal options
• Tenant improvement allowances
• Operating expense provisions
• Use and occupancy clauses
• Parking and signage rights
• Dilapidations

Negotiating the Heads of Terms allows you to reach agreement on the major points of the lease before investing significant time and money in legal drafting and due diligence. It's an opportunity to test the landlord's flexibility and responsiveness and to set the tone for the rest of the negotiation process.