Negotiate like a pro for best results

By Dale Willerton

For many dance studio owners, negotiating a good lease or lease renewal against an experienced agent or landlord can be a challenge. Dance studio tenants may go through the leasing process only once or twice in their lifetime, yet they have to negotiate against seasoned professionals who do it every day.

Whether you are renewing a lease or leasing a new location for your studio, the following tips will help you get the best terms possible.

Negotiate to win. All too frequently, dance studio tenants enter into lease negotiations unprepared and don’t even try to win the negotiations. If you are not negotiating to win, you won’t win. On the other hand, you can be sure the landlord’s agent, with big commissions at stake, is negotiating fiercely to win. Dance studio tenants should remember that negotiating aggressively is OK.

Be prepared to walk away. Try to set aside your emotions and make objective decisions. Whoever needs the lease deal more will give up the most concessions. Remember that a good dance studio in a poor location may not achieve its full potential.

Ask the right questions. Gathering information about how much rent other tenants are paying or what incentives they received will position you to get a better deal. Ask the right questions. Consider that your landlord and his agent know what every other tenant in the property is paying in rent, so you must do your homework too.

Brokers—friend or foe? Real estate agents and brokers typically work for the landlord who is paying their commission. It is not normally the agents’ role to get a tenant the best deal; it is their job to get the landlord the highest rent, or the biggest deposit. The higher the rent you pay, the larger the commission the agent earns. If you are researching multiple properties, try to deal directly with the listing agent for each one, rather than letting one agent show you around or show you another agent’s listing. Your tenancy is more desirable to the listing agent if he can avoid splitting his commission with other agents.

Never accept the first offer. Even if the first offer to lease seems reasonable, or you have no idea of what to negotiate for, never accept the leasing agent’s first offer. In the real estate industry, most things are negotiable and the landlord expects you to make a counteroffer.

Ask for more than you want. If you want free rent for three months, then ask for five months. No one ever gets more than he asks for. Be prepared for the landlord to make a counteroffer and negotiate with you as well. Don’t be afraid of hearing the word “no” from the landlord; counteroffers are part of the game.

Negotiate the deposit. Large deposits are not legally required in a real estate lease agreement. Deposits are negotiable and, more than anything else, often compensate the landlord for the commissions he will be paying out to the realtor. If you are negotiating a lease renewal and your landlord is already holding a deposit of yours, negotiate to get that deposit back.

Measure your space. Some dance studio tenants are paying for phantom space. Most rents are based on square footage, but often tenants do not receive as much space as the lease agreement specifies.

Understand your term. The length of a lease term is not necessarily a bargaining issue. Longer lease terms do not guarantee cheaper rental payments. In these days of economic turmoil, you should either negotiate a rental break prior to start-up for new leases or a rent reduction as you approach your renewal date.

Negotiate, negotiate. The leasing process is just that—a process, not an event. The more time you have to put the deal together and make counteroffers, the better the chance you have of getting what you want. Too often, tenants mistakenly try to hammer out the deal in a two- or three-hour marathon negotiation session. It is more productive to negotiate in stages over time.

Educate yourself and get help. Unless you have money to throw away, it pays to educate yourself. Taking the time to read about the subject or listen in on a leasing teleseminar will make a difference. And don’t forget to have your lease documents professionally reviewed before you sign them. With hundreds of thousands of dollars in rent at stake, plus personal guarantees, build-out costs, and sizable deposits, you can’t afford to gamble.

In leasing, dance studio tenants don’t get what they deserve—they get what they negotiate.