The Art of Lease Negotiations
I stumbled upon this video on YouTube embedded below, which is an interview of Hollywood super agent, Ariel Emanuel (William Morris Endeavor Entertainment) at the Web2.0 Summit 2010. If you are not familiar with Ariel Emanuel he is the real-life Hollywood super agent that the fictional character Ari Gold is based upon in the hit HBO series, Entourage.
In this video, Emanuel describes on a few occasions the dynamics of past negotiations he has had on behalf of clients with network studio executives and it is a classic example of who creates or holds the most leverage usually wins. This reminded me of so many lease negotiations I have had in the past with both Landlords and Tenants depending on which side of the table I was on.
The “Fair-Market” Deal
The office market is rarely in equilibrium and depending on the particular situation, someone to some degree, either the Tenant or Landlord is in a stronger negotiation position. I found this entire interview entertaining, but it is very long, so fast forward to the 8:25 mark to hear Emanuel discuss the power of leverage, then to skip to 14:48 and listen to the 16:30 point to pick up to these two classic lines “I have never cared what something costs; I care what it’s worth,” and “Fair is where we end up.”
This dialogue is the best example of what a good tenant rep does for his clients. He or she creates leverage by identifying and structuring viable options for his client’s tenancy and then negotiates for his client what the space is worth for that particular tenant to occupy the building for a given period of time. That might seem simplistic as many factors can impact the dynamics of the negotiations, but in essence this is what a great tenant representative does. Fair is where your are supposed to end up.