Most businesses sign a commercial lease assuming the landlord’s terms are simply how it works, but this is not the case. Every clause, concession, and point of flexibility in that document is negotiable, and tenants who do not know what to push for just end up locked into terms that serve the building rather than the business.
Charles P. Laginestra, Senior Vice President at CBRE with nearly two decades navigating both sides of the commercial real estate table in New York City, has seen the full cost of that assumption play out across more than 60 transactions totaling 3.5 million square feet. “A well-negotiated lease is not just a cost,” Laginestra says. “It is a competitive advantage.”
Leverage Exists. Most Tenants Do Not Know They Have It
The most expensive misconception a tenant brings to the negotiating table is the belief that they have no power. Market conditions, competing options, vacancy rates, and a landlord’s financial position all create room for flexibility that most tenants never consider. That room does not disappear because a tenant fails to ask. It simply transfers to the other side of the table.
Before any negotiation begins, Laginestra’s first priority is market intelligence. What are comparable spaces leasing for? What is the landlord’s occupancy situation? What is the building’s capital structure? These are not background details. They are the inputs that determine how much a landlord will move and on what terms. “That intelligence is your leverage,” Laginestra says, “and experienced representation is how you get it.” Tenants who walk in without that preparation are negotiating blind in one of the most consequential financial commitments their business will make.
Rent Is Not Where the Risk Lives
Rent receives the most attention in any lease negotiation. It is rarely where the most significant exposure sits. The clauses that will cost a business the most are typically buried deeper in the document: renewal options, termination rights, rent escalation caps, sublease flexibility, and build-out responsibilities. These are the terms that determine what happens when the business changes. Businesses always change.
Optionality built into a lease at signing costs far less than renegotiating from a weak position mid-term. A termination right that never gets exercised is cheap insurance; a renewal option negotiated upfront is leverage; and a sublease provision that gives the tenant flexibility to right-size preserves options that a rigid lease eliminates permanently. “The clauses that will cost you most are usually buried in the details,” Laginestra says. The businesses that understand this treat lease negotiation as risk management rather than a real estate transaction.
A Lease Is a Business Strategy Decision
The frame most tenants bring to a lease negotiation is transactional: how much space, at what price, and for how long? Laginestra’s frame is strategic. Real estate and human capital typically represent the two largest cost items on a company’s balance sheet. The location, the space commitment, and the flexibility of the terms will affect hiring, growth, and the ability to adapt as the business evolves. A lease signed for the business’s current location may constrain where it needs to go in three years.
“The businesses that fare best are the ones that align their real estate commitments with where their business is actually headed,” Laginestra says, “not just where it is today.” Get informed before you sit down. Get represented by someone who knows what the market will actually bear. Get the terms that work in your favor, not just the ones the landlord drafted first.
Follow Charles P. Laginestra on LinkedIn for more insights on commercial lease negotiation, tenant representation, and real estate strategy in New York City.
