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Too often, tenants focus on the base rental rate that the landlord is offering. The thought that there is more to negotiations than that base rental rate is usually not understood by most tenants, and often overlooked by brokers. What you are negotiating is the total package. This includes tenant improvements, parking, after-hour utilities, broker commissions, and potential rental concessions. In calculating the value of your leasehold, look at the value of all costs you could potentially incur. These are commonly referred to as “occupancy costs.”
Compare and shop.
You need to get good information on what the landlord is including in the packages he is offering to other tenants in the building. Landlords will (as we mentioned in earlier chapters) try to keep the face value of the deal as high as they can. There are two reasons for this: 1) the higher the value of the deal, the more valuable the building is (as value is based largely on rental revenue), and 2) he can then demand a higher price from the next potential tenant.
Make sure you (or your broker) get as much information as possible about comparative deals, but don’t stop at the rental rate. Look under the line. If the average TI allowance is $10 PSF and you only need $5, try and work the extra value into things like discounted parking or maybe free use of the building’s common conference center. Remember, you can’t get what you don’t ask for.