How landlords and listing agents think

The listing agent works for the landlord

When you call the number on a “For Lease” sign, you reach the landlord’s agent. Their job is to lease the space on the best terms for the landlord, and they’re paid by the landlord.

That’s normal and proper. It just means the friendly person showing you the space is not on your side of the table, however friendly they are.

Why face rent matters so much to a landlord

A building’s value is tied to its net operating income. Investors divide that income by a cap rate to get a value. At a 5% cap rate, every extra dollar of annual rent adds about $20 of building value.

So if a landlord lowers your rent by $2 per square foot on 2,300 sf, that’s $4,600 a year, or roughly $92,000 off the building’s value on paper. If they give you the same money as free rent up front, the rent roll still shows the higher number.

That’s why many landlords will say yes to free rent or a bigger tenant improvement allowance long before they’ll move on face rent. Use that.

What else landlords care about

• Vacancy. An empty space earns nothing and still costs taxes, insurance and maintenance. The longer it’s been empty, the more flexible they get.
• Risk. A tenant with strong financials, a guarantee or a deposit is worth more to them than a slightly higher rent from a shaky one.
• Lenders. Many landlords have mortgages with rules about lease terms, rent levels and approvals.
• Their plans. A sale, refinance or redevelopment changes what they want from your lease. See who owns your building.

Different landlords value you differently

The same tenant is worth more to one landlord than another. One has three empty units, another has a waiting list. One wants your use in the building, another doesn’t.

That’s why I ask several landlords for proposals at once. The spread between the best and worst offers is often bigger than people expect, and you only find it by asking.