Sell Your Occupancy by Leveraging Options

Negotiating a great office leasing outcome requires engagement with multiple prospective landlords over multiple rounds of negotiation.  It’s not just about having options; it’s about using them to create leverage.

The first step in a good process is to identify the right options.  Sometimes, this is counter intuitive in that it calls for the inclusion of buildings a tenant would not otherwise consider, options which impart specific strategic value.  It’s these building options, the ones a tenant may prefer not to occupy, which may have the greatest impact on value creation.

For tenants, it’s important to realize leasing office space is more about selling the occupancy than leasing the space.  The role of a good tenant broker is to orchestrate the occupancy selling process, to compel landlords to compete for the tenancy by offering incrementally better terms.  A good tenant broker is like a good auctioneer, able to drive others to offer increasingly more value.

Options are also useful for a host of other reasons.  For example, unless and until a binding document is fully executed by landlord and tenant, the subject space may be leased to a 3rd party.  Or, through the due diligence process, tenants may discover unfixable flaws, causing a building to drop from consideration.  When tenants focus exclusively on one option, they fail to harness leverage, and expose themselves to the possibility of losing a space late in their negotiating window which can have negative cost implications.

Don’t lease space.  Identify the right options, sell your occupancy, and choose the best bid.