Maneuvering in the Box
As leasing traction continues to accelerate, our black box series on the legal process of commercial leasing continues with part two of our secret sauce for managing what goes on during that often-dreaded and little-understood process.
Last month we focused on the precision vs urgency axis and how we balance the need for precision insurance against the reality that time kills deals.
This month our focus shifts to managing the simultaneous conflict on the other axis between each party’s desire to get it all and the need to accommodate the other side so that a meeting of the minds can be achieved.
The Zone of Reasonableness
In order to successfully traverse this axis, we start by scoping out the boundaries within which meaningful negotiations can take place, a zone of reasonableness, so to speak.
Negotiating outside the zone is largely a waste of time and money. For example, it would not make sense for a 2,000 square foot tenant to try to modify the condemnation clause in a New York City Class A office building lease, but it could make sense in the case of a 300,000 square foot tenant.
The size of the zone of reasonableness, which can range from a pinhole (one or both parties insist on getting it all) to an ocean (both parties are willing to accommodate), will be based on the relative bargaining power of the parties and influenced by a variety of other factors including timing, personalities and relationships.
Forging the Win-Win Deal
Once I understand the boundaries of the zone, no matter how lopsided the parties’ relative bargaining power is or which party I represent, I can operate from a position of strength to guide the negotiation to a point on this axis that represents a meeting of the minds.
In my opinion, and it doesn’t matter whether I represent the 900 pound gorilla or the 90 pound weakling, that point should represent a ‘win-win’ for both parties. After all, the success of the legal leasing process is not just getting to the finish line, it’s also about forging a viable long-term relationship between landlord and tenant.
The Need to Accommodate
As I noted in December, at a certain point in every transaction, the need to accommodate the other side trumps the desire to get it all. Managing this tension with the parties’ long- and short-term goals in mind is another part of our strategy for creating value as we toil away in the black box.
Stay tuned next month as we pull the axes together, and call us today to negotiate your leases. You can’t afford not to.