Value of Timing in a Negotiation
Time is either your friend or enemy. If it’s
your friend it’s the others enemy.
Let me provide a real-life commercial leasing example:
You are in the last 3 months of your ten-year lease. Business has been going very well. You are planning to renew your lease for another 5-10 years. You approach your landlord and are informed the market rates “base rental rates” for spaces in your area have doubled over the past ten years. To renew your lease the base rent will be increasing from your current rent of $40 psf to $80 psf.
What are you going to do? You don’t have time to identify a brand new location for the relocation of your business, negotiate an LOI, prepare architectural plans, get a permit, negotiate a new lease and build your replacement store in 3 months. Now, picture the same scenario only its year 8 or 9 within your ten-year lease. If the rental rates in this center are about to double, you have time to find a replacement location, build out your new site (or move to a new trade area), and notify all your existing customers of your upcoming relocation.
Don’t wait until the end of your lease term to negotiate your next lease term.