How to re-negotiate commercial rent downward?

Can anyone give any pointers on how to negotiate downward rental on a retail unit.
The owner is a corporate Landlord.
The Landlord has other property un-let so must be aware that the market is less than bouyant at the moment.

What is the best practice method of negotiating lower rental on a retail unit.
The rental on the unit would be the businesses greatest fixed cost and is necessary to prevent the business from closing down.

Does a representitive of the landlord call to the premises at all?

I know a guy who had “closing down sale” signs printed up and sitting behind the counter and gave the landlord a sob story the next time he was around, got a sizable reduction in rent.

No one calling around but that could be arranged if rent is missed one month.

I suggest that step no. 1 is to do some research in regard to the property market that you are interested in.
Actively go on line and check what other properties that are suitable to your business are availalble. Are there any, or more likely, how many?
Consider the business disruption that you may suffer as a result of relocation? Are you actively retailing or do you do your business mostly by phone or is it by casual trading?
Is your business determined based on it being physically positioned in the local environment? Then search locally.

Hoof it. i.e. out on foot a couple of mornings or afternoons and speak with other business owners or potentially letters. Ask questions, how much are you paying? how much area? what is the footfall like in that portion of town? etc. Pertinent questions to reflect the nature of what might happen to your business if you moved.

Talk with other landlords. Ask what rate they would give you for a certain duration? Negotiate hard. They will likely suggest a higher price first and be prepared to go lower. Use the information earlier gathered from your tour of the neighbourhood. Present this information cautiously to the landlords without being specific. Suggest a rent about 10 to 20% lower than the lowest that you have identified for the coming year.

What about the cost of shopfitting? Will that be significant? Add this to your cost tally sheet.

Make advance preliminary but non commiting agreements with other landlords on the possibility of you moving.

Speak with your landlord.
Discuss that you wish to have a lower rent.
That you are willing to stay if a lower rent can be agreed or that otherwise you must consider to leave.

These are just some suggestions and not entirely conclusive.

Moving is not an option. Reduced rent or closing down sale are the options.

Does you landlord know this?
Does your landlord have to know this?

Even if your landlord has this information, it’s not so bad at all.
Your landlord needs to know the bottom line issues in regard to your business situation, i.e. reduce rent or get no rent at all from Mr. Dipole.

This is a stark message to a landlord.
If the landlord is not listening, as is often the case with disinterested coporate landlords, then you need to speek to the manger of the corporate landlord or that persons manager, even taking it to the level of CEO of the corporate landlord. It will take many phone calls and given the nature of some of the corporate landlords, especially those with close associations to the banks or building societies, I’m not sure how successful that you will be. But best to lay out that stark choice of reduce rent or no rent. That’s necessary for them to hear.
It may be necessary to cry a little, keep calling many times every hour for a few days until someone at the corporate landlord takes up responsibility for pushing your case.
I believe that it’s in their best reasonable interest to deal with you fairly.

Getting them to behave reasonably means that you should have a solution available to counter their disagreements to reduce rent.
For example, if you can agree a 30% rent reduction but only for 3 months so that you they can complete analyisis of the reduction then take it.
Be willing to present reasonable options to them to ensure that they do not feel entirely forced to choose the armageddon scenario.

If, as you say, you are dealing with a “corporate” landlord, then find out who in the organisation can make a decision and negotiate.

Despite the fact that you contact most likely says “upward only reviews”, all contracts, even signed ones are negotiable and can, quite legitimately be changed if all parties agree.

Find out who can negotiate on your counterparties side (be sure they don’t need to defer to anyone else), decide on your negotiation strategy and what exactly it is you want to achieve and then contact them.

Blue Horseshoe

this was discussed before but i can not remember in which thread. as a far as i can remember the best solution was to tell the landlord that you were going bust and could he recommend a good receiver. the thought of trying recoup any lost costs from a bust business should focus him.
he might then suggest dropping the rent to keep you, the art off diplomacy is letting other people have your way.
if that doesn’t work wear a big T-shirt that says “the bust is getting bustier”

Good advice above,one point to remember is many shop tenants give PGs when they sign up to a new lease!

Communication is the key word here. Communicate your difficulty in and honest way… In this climate I have no doubt you will have your rent considerably reduced. We are all adults here, time to stop playing games!

A friend of mine got a reduction of 13% on a cafe he ownes and runs. I felt it was a sizeable decrease at first but then I was starting to think that he could of argued for even more depending on how he approched the subject. I reckon he should have another meeting in 3 months time and push for a further decrease of perhaps 8% as long as he’s pushing the envelope. The only problem is that he invested so much into the place from building the walls, laying the tiles by buying the fixtures and fitting that it’s not exactly easy trying to bargain with the fact that he needs to close down. Any suggestions on this scanario and what points can he argue. I would imagine the landlord would be very preceptive considering the current economic climate.

This sounds a bit dumb IMO.

If youre not actually going bust, panicking the LL into thinking you are is only going to speed up your exit.
If you say youre going bust he’ll be all over you for money.

Just tell them you want to re-negoiate the rent.
If they have spare capacity they are earning nothing on they will do whatever it takes to hold on to income.
Give them a price (lower than you want to pay) and tell them thats it, take it or youre out in 6 months.
The downside is, if you dont bargain hard enough, you’ll have to move in 6 months. If you dont they’ll shaft you because you’ll have shown 1- youre bluffing and 2- youre lying.

What lunatic would rather have an asset returning €0pm then a rent reduced from €1500 to €1000pm?

There’s plenty of amateur landlords around who would fit in to the category “lunatic” because they will not let below what it is, in their opinion, “worth”.

fortunately here it is a corporate landlord and no rent is as yet overdue.

in a similar position, the first things i would do is

  1. get an estimation from a local EA of what the rent should be, or compare it [if there are similar properties nearby to let] to others like it that are available. that should tell you the fair market price.

  2. assuming you have a good payment record then i would not do any ‘closing down’ stuff, that puts the fear in the owner that you won’t be able to make payments in the future. instead, rely on your strong rental history to make an argument for the reduction ie: we never missed payments and that is in your interest, you might get the price you are asking for elsewhere but you won’t be able to rely on them the way you can with us.

  3. make sure you have time to get out if you have to, send a 14 day notice letter with what you will offer, if you don’t hear back then move, there are some seriously great deals out there at the moment and thats before you start to negotiate the price.