If you were hiring an instructor for a course on lease negotiation, chances are you would not choose fictional car racer Ricky Bobby from the movie Talladega Nights. But in commercial real estate and particularly in my specialty, tenant representation, Ricky is spot on:
“If you ain’t first, you’re last.”
In commercial real estate, there is only one winner who gets the deal. There is no silver medal and everybody knows what you can do with participation trophies. So if you’re not first, you’re last. As Ricky says: “second place is first loser.”
In my career, I have represented both the Landlord/Seller side and the Tenant/Buyer side. I’ve won some big ones and also lost my share. On the landlord side, there were times I would send a tenant an aggressive proposal to relocate to my building, which they used as leverage to negotiate a renewal at their current location. I saved tenants a lot of money, not to mention time and effort. I actually thought I could start charging for that service. That would be preferable to a shelf full of silver medals and participation trophies.
These days, I spend most of my time on the Tenant/Buyer side. On a recent assignment, after touring 5 properties, I let a landlord’s representative know that he was our second choice. The prices and locations were comparable, but his space would take longer to build out, it had less natural light than the first choice, and it was lacking a kitchenette.
His response, as expected, was “what can I do to get into first place?” That is exacly what I want to hear. One of the most important aspects of tenant representation is to create competition, so landlords are bidding on my clients’ business.
Is the landlord going to cut some more windows in the exterior of the building to create more natural light?
Seriously doubt it.
Will he spend the money to add a kitchenette to his space?
Possibly.
Will he drop his rate by a dollar or two per square foot, or possibly offer some free rent?
Probably.
Does my client want to lease in his building?
Highly unlikely.
Can I go back to my first choice and tell him that the competition has dropped his rate by a dollar and offered two months free?
Absolutely.
So landlords and sellers fully understand the Ricky Bobby principle: If you’re not first, you’re last. And just like Ricky, they will drive the deal much more aggressively to get there.
As a tenant representative, one of the biggest values I bring is to create competition, ensuring my clients get the best deal on the ideal space for their business – because landlords know, “if you ain’t first, you’re last.”
