What is negotiation?
Negotiation is the process of bringing two sides to an agreement about terms and conditions. This begins the moment you respond to a question about the space from a prospective tenant.
Knowing the business goals your building must meet to reach the owner’s financial objectives is academic; negotiating and achieving them is an art form.
When negotiating:
- Try to keep things simple and friendly.
- Do not let poor attitude, ignorance of leasing procedures, or greed interfere with negotiations.
- Have patience when the process gets bogged down.
- Maintain your professionalism and do not let yourself get frustrated.
- Allow leasing agents to earn commissions and to fill that vacant space.
- Do not let any obstacles become personal or cloud your judgment.
- If you feel there is a problem, such as a stalled deal, approach the building owner first for guidance. In addition, call your prospective tenant, explain the situation, and seek a resolution that may salvage the deal.
What personal skills are needed for successful negotiations?
In the early stages of negotiations it is important to establish yourself as a straight shooter, rather than someone who wastes time playing games. You can help yourself establish a reputation for credibility and reliability by:
- knowing your product and sticking to the facts, not embellishing or misrepresenting them
- being careful about saying too much too soon and thus tipping your hand
- avoiding saying negative things about competing buildings or their management
By the time you begin to put proposed terms and conditions down on paper, as in a letter of intent or a proposal, you should have developed a feel for the prospect that allows you to create a more specific negotiating strategy.
What are four keys to successful negotiating?
Know how to listen: Listening is an art. After each conversation you have with the prospect, write down what you heard, and think about every point that the prospect made. Keep your notes so you can refer to them before follow-up meetings.
Know when to stop talking: The time for you to talk is when you are presenting the building and all the benefits of tenancy to the prospect for the first time. Learning when to stop talking and to start listening to the prospect is important. The time to listen and not interrupt is when the prospect tells you the features of the building that he or she likes, as well as the motivation for moving. Focus on these bits of information as you negotiate a lease.
Know what is really important: Never lose a deal over a couple of gallons of paint. You cannot always assume that the business terms of a proposed lease are going to be the most important issues. Factors such as the color of the wall covering, the texture of the carpet, accent lighting in the reception area, and soundproofing in the conference room, though merely aesthetic, may be important to the prospect. Even though these issues might be the furthest things from your mind as you concentrate on the major terms and conditions, be sensitive and listen. The flexibility to meet the prospect’s needs and wishes on these types of details might gain you an edge.
Know how much authority you have: While you need someone in authority to guide you and approve decisions, direct owner involvement in the leasing or negotiating process is not usually helpful unless the owner has sharp sales skills. In general, the best way an owner can enhance the success of the leasing campaign is to stay in the background and allow you to act as the agent who engineers the deal. On occasion, however, the prospect will insist on involving the owner, and you may have to take that risk to secure the lease.
Both you and your prospect will be trying to achieve certain terms and conditions. Nothing is wrong with seeking an advantage over the other. After all, this is business.
How do I find tenants?
Tenants are most commonly found through:
- brokerage companies—a third party that interacts between a buyer and a seller to complete a purchase agreement
- tenant referrals—rospecting for tenants by getting names from current tenants
- walk-ins—people who show up at your office and want to know about leasing space in the building
- phone inquiries—people who call in to get information about leasing space in the building
- networking—the exchange of information or services among individuals, groups, or institutions
- canvassing—the process of going to the offices of all of the tenants in a building, regardless of size, and, if possible, learning their lease expiration date and getting them to think about leasing a space in your building
- cold-calling—targeted process of identifying a potential prospect and then contacting that person either by phone or in person
This article is excerpted from BOMI Institute’s NEW Leasing Reference Guide. The guide can be purchased for $49.95, plus shipping and handling, by calling 800-235-2664, or visiting www.bomi-edu.org.
BOMI Institute—Building Owners & Managers Institute
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