A Look at Lease Negotiations: Case Study Spotlight

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By Dan Adamski, Managing Director, Jones Lang LaSalle

The business landscape, like the commercial real estate scene, is dynamic.

Change is rapid, and goals are adjustable. As a result, business owners often need the flexibility to alter their current real estate portfolio. Whatever the reason, the ability to engage in successful lease negotiations gives business owners the freedom to reinvent goals, and change with the times.

We suggest three simple steps to guide the negotiation process.

Step 1: Rethink Business Goals

Take a moment and critically assess your business goals and objectives. How does your office play into your success? What new amenities or alterations would enhance current operations?

Step 2: Create Your Own Strategy – Unique to Your Business or Organization

Analyze the performance of your current space as it relates to employee happiness and productivity. What amenities are pivotal? What could you stand to lose? The ability to understand top priorities will give you leverage to prioritize top needs vs. something you might be willing to concede during negotiations.

Step 3: Negotiate

Before entering into negotiations, be prepared. Examine your current lease and make note of termination rights, lease clauses, and use the information to your advantage.

See how we do it at Jones Lang LaSalle. Below, we’ve spotlighted a few cases in which our experts engaged in aggressive lease negotiations to fulfill, and exceed, client business goals.

JLL Negotiates Prime Lease Terms for Cleveland Business

Photo: mbi | k2m��

Photo: mbi | k2m

BrandMuscle, a local marketing company, faced lease expiration. Internal leaders were unsure of where to begin, so they reached out to JLL for assistance. The marketing company desired new space that encouraged improved productivity and efficiency.

To begin, JLL analyzed potential goals and needs over the next ten years. Brokers then began looking at prospective spaces − in both suburban and urban locations − for BrandMuscle’s new office location. After an extensive search, JLL found a downtown space suitable for BrandMuscle’s long-term goals.

BrandMuscle signed a long-term lease in May 2012, and completed the move in December. Through strategic negotiations, and armed with a deep understanding of client goals, JLL was able to negotiate a significant free rent period, an above market tenant-improvement allowance, moving allowance, termination rights and expansion and contraction rights.

Visit the full case study for details on BrandMuscle’s move.

JLL Negotiates Lease Restructuring and Partial Termination for Pittsburgh Business

StanwixNational City Bank partnered with JLL to conduct a review of its real estate portfolio. While taking inventory of the Bank’s eight floors under lease, JLL found several vacant spaces. Brokers discovered, after close investigation, that the unused space totaled 54,722 square-feet. At $19.20 per square foot, this unused space was costing the Bank $1,050,874 per year. JLL then looked for a solution to remedy space utilization and current leasing terms.

Experts quickly located a prospective tenant – a law firm – considering space in a nearby building. Brokers worked to understand their current and future real estate needs, and proved that the Bank’s excess space would align with the firm’s business goals. Successfully securing a new tenant, JLL moved on to the next phase.

Buyout negotiations for the excess space ensued. Within two days, a new lease, including partial termination, was signed. Following negotiations, National City Bank eliminated 54,722 square feet of space from their lease, which resulted in savings of about $800,000 per year over the next nine years.

Visit the full case study for details on National City Bank’s lease restructuring.

Visit the JLL Spaces post featuring 6 Tips to Negotiate Your Commercial Lease Renewal for more on lease negotiations.

If you’d like assistance to negotiate or re-negotiate leasing terms, please contact us at spaces@am.jll.com.  

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About the Author 

Jones Lang LaSalleAs Managing Director in JLL’s Tenant Representation Group,  Dan is responsible for all client requirements in Western Pennsylvania and West Virginia. He specializes in Tenant Representation. View Dan’s full bio to read up on his experience.