Negotiating Tips

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Unfortunately, at some point you may have to evict a tenant or pick up the pieces if a tenant abandons its space. It’s hard enough to have to regroup and find a new tenant quickly. But being forced to take on an undesirable tenant—one with a bad credit rating or that doesn’t help the synergy you have established at your shopping center or some other part of your business plan—is worse. And if you’re in one of the many states that force owne...

While the economy has steadily improved in many areas, it’s still important to protect yourself from the perils of a bankrupt tenant. When negotiating with a prospective tenant—especially one that’s small or not financially strong—keep in mind that if it experiences financial problems the security deposit could wind up being your only access to funds that can compensate you if the tenant stops paying rent or otherwise breaches the lease. A cash s...

If you must fill vacant space in your office building or shopping center while it's undergoing renovations, your new tenant might not have access to some of the amenities, equipment, or services that it expects to be able to use. Negotiate the lease to protect yourself from the tenant's argument that it's entitled to terminate its lease—or, worse, sue you—because certain portions of its space or the common areas are not usable.

Given the current state of the economy, it is not surprising that tenants struggling to stay in business are resorting to rarely used negotiation tactics to ride out the downturn. Specifically, there has been a rise in rent relief exchanges, in which owners temporarily reduce rent for tenants in exchange for taking back certain lease rights the tenants would otherwise be entitled to.

A commercial tenant's negotiating power very often depends on its size. This is especially true about tenants who are “big-box” stores—for example, Wal-Mart, Sears, or Target. But a new trend, the opening of big-box “concept stores,” has commercial owners hopeful that they can do business with big-box stores, without as many tenant-friendly, owner-overpowering lease terms.

In today's stagnant economy, the Federal Reserve is aggressively cutting interest rates in an attempt to spark the economy. The rate cuts are giving property owners an opportunity to refinance and purchase new properties or to tap existing properties' equity for operating capital.

Lower interest rates, however, don't necessarily mean it will be easy to get a loan. If your collateral is your building or center, your lender will be concerned with more th...