Accommodate vs Get It All
November 12, 2024 • As the topsy-turvy COVID and post-COVID eras move into the rearview mirror, our proprietary Black Box strategy for managing the legal leasing process remains essential.
Originally published in December 2014, it’s the blueprint for landlords, tenants, brokers, and attorneys who want to consistently achieve best-in-class, high-performance commercial leasing results.
Please enjoy this republication of Part Three of our series: Opening the Black Box: Accommodate vs Get It All.
In the Black Box, the second axis represents the conflict between the need to accommodate and the desire to get it all.
In the last post in this series we discussed the precision vs urgency axis: the conflict between the need to get everything right and the reality that time kills deals. In this post 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 party can insist on getting it all) to an ocean (both parties must accommodate), will be based on the relative bargaining power of the parties and influenced by a variety of other factors including market conditions, timing, 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 about getting to the finish line, it’s also about forging a viable long-term relationship between landlord and tenant.
The Need to Accommodate
At a certain point in every transaction, the need to accommodate the other side must outweigh the desire to get it all, even if just incrementally. Managing this tension with the parties’ long- and short-term goals in mind is another one of our strategies for creating value as we toil away in the Black Box.
Stay tuned as we pull the axes together in our next post and focus on that all important point in every commercial lease negotiation when the lease is almost, but not quite, final and can implode suddenly and without warning.
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View all four parts of the Black Box series here on our News + Views page.