Reduce your rents: Landlord negotiating logic
There are a number of issues involved in successfully negotiating a discount in your lease with your landlord.
On or side is the clear fact that most landlords understand, that revenues are generally down, in many cases significantly down. Overhead is always increasing and leases negotiated when revenues were higher are unaffordable in today’s declining market. This puts pressure on landlords to willingly reduce its rents.
The problem is, landlords are reluctant to negotiate with existing renters. They are in contract, possibly personally guaranteed, and frequently current, yet ‘wanting’ a rent reduction. This is a very tough negotiation and likely to fail.
If the renter is in significant arrears, there may be some justification demonstrated but the issue frequently includes the pay back of back unpaid rent, further complicating the workout and threatening their personal guaranty.
Sometimes when dealing with large national real estate companies, there is simply no practical way to even propose let alone negotiate a discount for an established lease.
It is being done, successfully every day, all over the country, as any landlord would much prefer to discount rents than have a long term vacancy and thus there is a strong desire to keep the tenant even at a lower lease rate.
Thus, the best negotiation includes a clear demonstration with hard numbers, current operating statements demonstrating the massive losses or at least significant reductions in revenue thus the reduction in net profit requiring a reduction in rents if the business is to remain viable. Present your case with convincing numbers and the landlord will have little choice if your presentation is credible.
Do it, it may help you survive and them emerge again as you adjust your business model to the economic conditions we are in.
