A landlord, by definition, is a person (or institution) who provides the use of land, a building, or an apartment to a tenant in exchange for payment. This last part is very important and sometimes overlooked by landlords eager to attract the best tenants.
In commercial leasing, the landlord’s objective during contract negotiations is to ensure that the tenant essentially pays for everything; however, there are exceptions to this rule that can substantially impact the landlord’s bottom line. A competent commercial real estate agent will consider these exceptions with their client before putting together an offer.
Landlord Obligations in Commercial Leasing
Landlords are expected to cover certain costs, the list below covers six of the most typical; however, this list is by no means comprehensive. Even if you’ve been involved in commercial lease negotiations before, obligations and related costs can vary from landlord to landlord as well as office building vs. retail space. Always seek the advice of a competent commercial real estate agent before entering into negotiations or signing a contract.
The Art of Over-Negotiating
At M Commercial Realty, we’ve had the pleasure of representing numerous landlords over the years and dealt all too often with agents representing tenants who negotiate way too aggressively (we always recommend consulting with a competent commercial real estate agent before entering into commercial lease negotiations).
In any negotiation, you want someone competent and confident representing you and you certainly don’t want someone who will bow to unnecessary concessions. There is, however, a point at which a negotiator becomes too aggressive and is actually acting against their client’s best interests by destroying any goodwill held by the other side.
We encountered such an agent a few years back who sent an offer for office space that was so aggressive the landlord wouldn’t make any money at all off the transaction. We sent the following answer: Our client is a for-profit business, not a charity.
Needless to say, that agent’s client did not secure the office space and was none too impressed as a result. A competent agent understands that landlords have a cost threshold after which the agreement is no longer profitable, and can prepare a winning offer that is also favourable to his or her client.