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Eisenkraft, Noah (2016). "Office Rental Negotiation", Custom Negotiations, https://customnegotiations.org/.
All content is © Noah Eisenkraft 2024, all rights reserved.
You are the owner and sole employee of Executive MatchMaker, a boutique consulting firm that helps executives find new jobs. You started Executive MarchMaker last year after spending a decade working in corporate human resources. You love being your own boss! It's such a great feeling to help people find exciting new opportunities. Plus: you made more money in the last six months than you previously made in a year!
One of your big goals for this year is to move Executive MatchMaker out of your home and into a private office. While your clients seem okay with meeting in your home, a private office would make everything feel more professional. You have been looking for offices that do not have a long commute and will preserve your clients' privacy.
You recently toured an office at Corporate Court, a 40-unit office complex in Chapel Hill. The office's location is perfect. It's not too far from your house and has a lot of privacy. You are meeting today with the developer and landlord of Corporate Court to negotiate the terms of a lease.
You have identified eight issues that you want to discuss during the negotiation: office cleaning policy, security deposit, sublet policy, lease length, utilities policy, monthly rent, start date, and guaranteed parking allocation. Your negotiation is not complete until you reach an agreement on all eight of these issues.
As part of your negotiation preparation, you ranked the issues in terms of their relative importance. Your goal is to reach an agreement where you reach the desired terms on your most important issues. However, you should not feel limited by the list of issues described below. Feel free to add issues to the negotiation if they will help you create a better deal.
The most important issue in this negotiation is the lease length. An office lease can be any length. Some leases are renewed monthly while others extend over several years. You want to sign a short lease. You are not yet sure whether you will like having a dedicated office and want to avoid getting locked into a long-term lease. It is critical that you get a lease length of month-to-month.
The utilities policy is slightly less important. Utilities such as Internet, garbage service, water, and electricity are sometimes arranged and paid for by the landlord. You would like the landlord to pay the utilities. Having the landlord pay for utilities reduces your expenses. You strongly believe you should get a utilities policy of internet, garbage service, water, and electricity included.
The sublet policy is important to you, but not critically so. Office leases often include a clause that describes the circumstances under which the tenant can sublet the office to someone else in their absence. You would like a lenient sublet policy. Your work sometimes takes you to foreign cities for periods of a few weeks to a month. You would like to sublet the office to one of your consulting colleagues during these trips. You prefer a sublet policy of sublets allowed with no advance notice.
The next most important issue is the guaranteed parking allocation. A guaranteed parking space cannot be used by anybody except the tenant and their guests. Having more parking spaces will make it easier for your clients to park when they visit your office. You would like a guaranteed parking allocation of four spaces.
The remaining issues are relatively unimportant to you. The most important of these low-importance issues is the start date. The start date of the lease refers to the day that a new tenant begins paying rent. You do not want to start the lease soon because you are currently too busy to schedule a move. You'd like to get a start date of four months from now.
The second low-importance issue is the security deposit. Landlords often require a security deposit to cover potential damage caused by the tenants, in addition to the first and last month's rent. It is returned once the tenant moves out, less any money required for repairs. You want a smaller security deposit. Asking for a large security deposit signals less trust between the landlord and the tenant. If you had to choose, you would like a security deposit of zero dollars.
The third low importance issue is the monthly rent. Based on your research, a reasonable monthly rent for Chapel Hill is approximately $1,800 per month. Paying a lower rent gives you more to run your business.
Finally, the least important issue to you is the office cleaning policy. Offices get dirty. A landlord-provided cleaning service can keep everything looking great and well maintained. You would like as many cleanings as possible, especially with the landlord paying the bill. Any help with the office is always appreciated. While you don't plan to fight much for this, you'd like to get an office cleaning policy of biweeky cleanings.
Should you and the landlord fail to reach an agreement, you will lease an office with Beta Buildings, a nearby office park. Beta Buildings has offered you an okay deal. You plan to pursue this opportunity unless you are able to get most of what you want in your upcoming negotiation.
Eisenkraft, Noah (2016). "Office Rental Negotiation", Custom Negotiations, https://customnegotiations.org/.
All content is © Noah Eisenkraft 2024, all rights reserved.
You are the developer, owner, and landlord of Corporate Court, a 40-unit office complex in Chapel Hill. You originally built Corporate Court 15 years ago and have maintained an average monthly occupancy rate of 93%. You are proud to run such a successful business.
One of your long term tenants recently decided to retire and give up their lease. The vacated office is a ground-floor corner unit in Building 3. It is easily accessible from the parking lot, but also far enough from foot traffic to ensure privacy. The retiring tenant used the office to see patients in her psychotherapy practice. It's a perfect office for a sole proprietorship or a small business.
You are meeting today with the owner of Executive MatchMaker, a boutique consulting firm that helps executives find new jobs. The owner of Executive MatchMaker toured the vacant office recently and said that it meets all of their needs. You scheduled this meeting to negotiate the terms of a potential lease.
You have identified eight issues that you want to discuss during the negotiation: office cleaning policy, security deposit, sublet policy, lease length, utilities policy, monthly rent, start date, and guaranteed parking allocation. Your negotiation is not complete until you reach an agreement on all eight of these issues.
As part of your negotiation preparation, you ranked the issues in terms of their relative importance. Your goal is to reach an agreement where you reach the desired terms on your most important issues. However, you should not feel limited by the list of issues described below. Feel free to add issues to the negotiation if they will help you create a better deal.
The most important issue in this negotiation is the security deposit. Landlords often require a security deposit to cover potential damage caused by the tenants, in addition to the first and last month's rent. It is returned once the tenant moves out, less any money required for repairs. You want a larger security deposit. A larger security deposit helps you repair any damage that tenants inevitably create. It is critical that you get a security deposit of two months rent.
The monthly rent is slightly less important. Based on your research, a reasonable monthly rent for Chapel Hill is approximately $2,200 per month. Charging a higher rent gives you more money for business.
The guaranteed parking allocation is important to you, but not critically so. A guaranteed parking space cannot be used by anybody except the tenant and their guests. Having fewer guaranteed spaces makes more spaces available for other tenants. You prefer a guaranteed parking allocation of no spaces.
The next most important issue is the sublet policy. Office leases often include a clause that describes the circumstances under which the tenant can sublet the office to someone else in their absence. You would like to reduce subletting. Subletting an office is a security problem for the other tenants in the building. You would like a sublet policy of no sublets allowed.
The remaining issues are relatively unimportant to you. The most important of these low-importance issues is the start date. The start date of the lease refers to the day that a new tenant begins paying rent. Although your current tenant has already vacated the office, a later start date would give you more time to make repairs. Starting the lease too soon rush the repairs and increase long-term costs. You'd like to get a start date of four months from now.
The second low-importance issue is the lease length. An office lease can be any length. Some leases are renewed monthly while others extend over several years. You would like to sign a long lease. It's expensive and time-consuming to find new tenants for any of your offices. If you had to choose, you would like a lease length of two years.
The third low importance issue is the utilities policy. Utilities such as Internet, garbage service, water, and electricity are sometimes arranged and paid for by the landlord. You would like to not pay for the utilities. It is more fair when tenants pay for what they use. Although it is not at all important, you'd prefer a utilities policy of no utilities included.
Finally, the least important issue to you is the office cleaning policy. Offices get dirty. A landlord-provided cleaning service can keep everything looking great and well maintained. You can reduce damage to the rental by having the office cleaned frequently. It is more expensive to do major fixes after a tenant leaves than to keep an office professionally cleaned and well-maintained. While you don't plan to fight much for this, you'd like to get an office cleaning policy of biweeky cleanings.
Should you and the prospective tenant fail to reach an agreement, you will lease the office to Dr. R. S. Townsend, a psychiatrist whom you met at the country club. Dr. Townsend has offered you an okay deal. You plan to pursue this opportunity unless you are able to get most of what you want in your upcoming negotiation.
Eisenkraft, Noah (2016). "Office Rental Negotiation", Custom Negotiations, https://customnegotiations.org/.
All content is © Noah Eisenkraft 2024, all rights reserved.
Your customized Office Rental Negotiation is a 8-issue negotiation simulation with long issue descriptions.
You chose to use an 'unscored' version of this negotiation simulation. The interests and issues descriptions in an unscored simulation are entirely qualitative. Differences in valuations are described using rank ordering and the range of possible options is described in words.
Certain lessons are taught more effectively with unscored simulations. An simulation without scoring helps participants focus more on the process involved in reaching a good deal; they are an ideal tool for teaching negotiation preparation skills. Additionally, using unscored simulations encourages participants to think more deeply about the interests that underlie their positions. This can yield more creative solutions than selecting from the list of options in a scored simulation.
Negotiation simulations vary in the extent to which negotiators can create and claim value using log-rolling, compatible, and distributive issues.
Log-rolling issues are issues where the two parties want different outcomes, but one party places more value in the outcome than the other. The way to successfully negotiate log-rolling issues is to 'bundle' issues that one party values highly with issues that the other party values highly. This bundling process allows people to simultaneously create value with and claim value from their counterpart.
Compatible issues are issues where both parties want the same outcome. The only way to be successful is to create value with your counterpart.
Distributive issues are issues where the two parties interests are directly opposed. The only way to successfully negotiate a distributive issue is by taking value from your counterpart.
Best alternatives to a negotiate agreement (BATNAs) describe what each party will do if they are unable to reach a deal. BATNAs determine the reservation value of the parties, i.e., the value that a negotiated outcome must exceed before a party should rationally accept the deal.
Permission is hereby granted, free of charge, to copy and distribute this customized simulation in any medium or format for teaching or research purposes. You are prohibited from reselling the simulation or collecting any money from its distribution.
Please give appropriate credit when using this simulation. I ask that you cite both my paper on custom negotiations and the specific case. These citations are
Eisenkraft, Noah (2017). CustomNegotiations.org: A free resource for creating custom negotiation simulations. Negotiation Journal, 33, 239-253.
Eisenkraft, Noah (2016). "Office Rental Negotiation", Custom Negotiations, https://customnegotiations.org/
The simulation is provided "as is" without warranty of any kind, express or implied. In no event shall the authors or copyright holders be liable for any claim arising from or in connection with the use of this simulation.
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