5 Important Strategies in a Tight CRE Market
- Aug 19, 2015
When buying property in today’s market, follow five key strategies to achieve success in negotiations.
- Give yourself plenty of time. When opportunities are far and few between, it is imperative that you give yourself more time than you think. Starting a project six to eight months before an actual delivery date is not an unrealistic expectation. Ideally, you can start the education process 12 months before you need to “pull the trigger.” That way when the right opportunity comes around, you will be ready to react.
- Attempt to have many options. It’s important to have options that you can negotiate against, as most likely many of those options will be leased or sold during the process.
- Negotiate delicately. If you really want the property, it’s imperative not to over-negotiate as the owner most likely will move on to the other interested parties. A client of mine just lost their preferred alternative because they negotiated on a half of month’s rent abatement and one month later in their proposed occupancy date. The landlord had three offers on the table and we were #3. The landlord responded with the same counter proposal to all three tenants. Tenant #2 accepted the offer as presented by the landlord and won the deal.
- Be kind to the other side (Landlord’s Broker). It’s extremely important to be professional and respectful to the other side during negotiations in a tight market. If personalities get in the way, the property owner’s broker may suggest to the property owner to take one of the other back-up offers.
- What is your BATNA? The reality is, what “is” your best alternative to a negotiated agreement? If you don’t have enough options available you will be in a weak position during the negotiations. Be flexible and willing to make compromises.
It is extremely feasible to negotiate favorable terms on the right property during a tight market; it just takes some creativity and fortitude.