Space for Less (Negotiating a Lease)

Challenge

A leading, regional medical services company identified commercial real estate that complemented its needs in terms of size, location, construction type, etc. Since the space was being marketed directly by the owner – sophisticated real estate owners and operators – the client felt disadvantaged in negotiating lease terms since they were not real estate professionals; moreover, the landlord refused to cover the commission for any realtor, should the client choose to introduce one to negotiate on their behalf. The client originally turned to its attorneys to negotiate the lease. However, the lawyers were aggravating the situation, and an impasse had been reached.

Consensus Solution

Consensus negotiated the lease terms on behalf of our client, focusing on five key aspects:

• Landlord’s contribution to client’s construction costs
• Annual rent and rental increases
• Ability for client to expand space or relocate during lease term without penalty

Throughout the negotiation process, we were careful to protect the relationship with the landlord, knowing that, if were able to consummate a deal, a contentious negotiation experience could adversely affect our client during the lease, especially if the client needed to expand or relocate during that time (in which the landlord could be asked to contribute to additional construction costs or to let the client break their existing lease).