On many occasions, I’ve written about the perspective of some one-sided landlords who blatantly disregard the needs of their tenants in the name of greed and selfishness. Some tenants, too, can be just as selfish. Such tenants often miss the opportunity to build profitable relationships with their landlords. Good tenant advisors constantly counsel landlords that, to be truly successful, they must care about their tenants’ success, and not just view tenants merely as rent payors.
Tenants have a similar interest in seeing their landlords succeed. This doesn’t mean that landlords and tenants should run each other’s companies. It does mean that both landlords and tenants should view each other as more than mere transactional opponents.
Landlords and tenants would do well to consider themselves as interdependent partners. A tenant without a building to rent would have no place to conduct its business, and would likely be forced to divert capital from investment in itself to real estate ownership. And, a landlord without tenants would own a lot of empty buildings.
I find it amazing when over-zealous brokers get tenants worked-up by suggesting that landlords should not be entitled to profit when they complete lease deals or renegotiate leases. Writing as a tenant advisor, I must ask those brokers how silly it is to assume that anyone would engage in a business endeavor without a profit motive. Everyone is entitled to profit!
The issue isn’t one of whether a landlord is entitled to generate profit, but more of HOW landlords generate profit, how much they generate, and are they transparent in doing so?! Don’t get me wrong. As a tenant advisor, I don’t advocate over paying for anything, let alone rent. And, neither am I suggesting that tenants should consider themselves as the funding sources for commercial landlords’ profits.
Interestingly, landlords are not perceived as a group that garners anyone’s pity. However, given current global economic condition, and those of credit and real estate markets, if there ever was a time when landlords deserved anyone’s sympathy, now would be that time. The government and the business communities must recognize the challenges commercial landlords currently experience, along with the ongoing struggles that most of them will endure over the next few years. If not, the tenants we advisors and brokers represent may have fewer stable leasing opportunities, and therefore, those tenants could encounter much bigger problems!
Given the above, tenants are now in a great position to negotiate very aggressively to secure favorable terms, either on acquisitions or on lease renegotiations. How they do that, and with which landlords, will make all the difference in the world. However, aggressive negotiations don’t mean stupid negotiations!
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About Real Estate Strategies Corporation
Real Estate Strategies Corporation is a respected corporate advisory and transaction services firm that provides thought-leadership, decision-making, planning, project management, and transaction execution services to finance and senior executives at management team-led public, private, and portfolio companies, and not-for-profit organizations. Under the leadership of its award-winning CEO, Andrew Zezas, RealStrat’s clients engage the firm when acquiring, disposing of, renegotiating, or enhancing occupied leased or owned real estate in New Jersey, Pennsylvania, New York, Connecticut, and throughout North America. By creating and executing Business DRIVEN Real Estate Solutions and identifying hidden Opportunities, RealStrat drives greater operational and financial performance in support of its clients’ stakeholder objectives, M&A requirements, and exit strategies.
In the current economic environment, RealStrat’s efforts are focused on uncovering, capturing, and re-purposing hidden liquidity and minimizing risk in its clients’ leased and owned real estate. The firm provides counsel as to competitive advantage strategies in preparation for the eventual economic recovery. Visit www.RealStrat.com. Follow CFO Studio at http://www.Twitter.com/CFOstudio.
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