Author: Coralie Clément September 2009

How to preparean effectiveLease Negotiation?

FOCUS ON CASH

PLAN

THE FUTURE …

DEFINE YOUR SPACE

REQUIREMENTS

TARGET THE RIGHT

LOCATION

> 4 Key Tips

> Define your

Space Requirements

3

List your Technical requirements: - Electrical needs- Communication needs (Data room)- Special H.V.A.C.

Get a clear understanding of your requirements in terms of:- Sqm/Sqf (capacity)- Design- Parking spaces- Storage

Detail your expectations regarding:- The Level of Services

(reception/lift/..)- Maintenance & Repair- Security & Power usage

Select your spacedepending on:- Sustainability- Infrastructure for

Disable people

=> Sustainability has an impact on your corporate i dentity & positivelyimpact the community & environment

=> You can increase innovation by designing facilit ies that allow innovative process

Define your rent budget=> $/sqm

> Target the right LocationTarget the right LocationTarget the right LocationTarget the right Location

4

Location:- CBD/outside- Distance to customers/competitors- Distance among company sites & businesses- Free Trade Zone (Tax Incentive)- Access to Public Transport- Catering facilities / Nearby amenities for employees- Image rating based on building attributes

Branding:- Roof/Exterior Signage rights - Use of company logos & colours in workplace design- Do you want an office with a view important?- Do you target highest or lowest floor?

=> Promote Marketing by selecting locations that at tract the customers & createworkplace that supports the brand

=> Seek location convenient to employees to increas e satisfaction & productivity

> Focus on CashFocus on CashFocus on CashFocus on Cash

5

Reduce One-time costs & Expenditures

> By negotiating:- Fit out / instalments- Landlord LHI incentive- Rent free- Rent payment terms

> By reducing- $/Sqm/Year- Rent overlap (for relocation)- Deposit impacts

=> Adapt your strategy depending on your financial condition by calculating Discounted Cash Flow, IRR & Payback for each available options.

> Plan the FuturePlan the FuturePlan the FuturePlan the Future

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Keep the flexibility to reduce/dispose or grow the space:

- Negotiate Break option with/without penalties- Negotiate the right to reduce the space through Assignment, Sublease, Surrender- Allow Future growth through Expansion Option

Negotiate the right to do tenant improvements & changes in premises (expansion/reduction) and be aw are of your reinstatement clause

Adopt Flexible Lease period with renewal option

Reduce lock in period & termination/renewal notice

Be sure that the landlord notice in case of sales a llow sufficient time to relocate

Be ready for Rent reviews (annual index or agreemen t)

> ConclusionConclusionConclusionConclusion

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Begin the process early.You need time to research the alternatives, negotiate the lease, manage change in premises, relocate… Allow a generous amount of additional time for unexpected delays in the leasing process and government authorities depending on the country.

Understand the local standards & specificitiesTo do so, you must liaise with your broker and conduct a full market research

Once properties have been short listed- Set goals & anticipating the counterparts’ goals- Avoid any conflict of interest & fraudulent behavi our- Understand the background of your Landlord

It will help you in the Lease Negotiation. - Define yourself a few lease options & be ready to d o

compromise

Make sure that the property fits and supports the b usinessand not the other way round.