One of the challenges in any commercial property transaction is creating a deal or contract that benefits your client while also satisfying the other side. In volatile markets and where commercial property vacancies are on the rise, developing negotiation strategies that lead to a win-win rather than a win-lose agreement is a plus for everyone at the table.
Many of the more aggressive negotiation strategies of the past, including the rush to use the “take it or I walk away from the table” approach, are no longer effective. Taking the time to discuss all options before ending the negotiation and walking away can provide opportunities to seal the deal even if the initial offers are far apart. Developing your skills in negotiation and communication allows you to express what you want while also accommodating the other side’s needs.
Before walking into the negotiation, know as much as you can about the other side. Preparation should be similar to a role play, where you consider what, when, why, and how the other side thinks. The internet provides a wealth of information you can tap into about commercial real estate in a specific industry, market, or geographic location. These details help to flesh out the points the other side will use. At the same time, you can develop your response based on research and insight into their pressure points.
Listening closely to what the other side is saying is a critical skill. Yes, it is vital to have your bottom line as the focus going into the meeting. However, listening to the other side’s responses to your offer provides insight into their strategy. Asking open-ended questions when you hear an objection or a counteroffer is a skill worth developing. A simple “Can you tell me more about that?” rather than a “no” allows the opportunity to find common ground. Expert negotiators let the other side do the talking while they gather information and create solutions.
Another critical consideration is making the first and best initial offer. The opening offer is always the starting point in the negotiation, so it should be your best possible result. The other side will counteroffer, but you have put the pin in the board as to where the negotiation begins.
While difficult, it is critical to avoid responding personally to the offer, the behavior, or even the language of the other side. Getting rattled or upset limits your ability to listen and to think through potential solutions. Taking a deep breath and clearly stating your objectives throughout the negotiation is an integral part of staying calm and thinking clearly.
There is a reason they say negotiation is both an art and a science. Doing your homework, recognizing the pressures facing the other side, and communicating your needs is the science. Knowing when to talk, when to listen, and when to leave the table is the art. It is something we can all continue to improve on.
