Talking Security

Office Lease Security Deposit

It is so crucial right now to talk about security deposits, with post-pandemic repercussions, and landlords who are still sensitive about this topic after many tenants have left their offices last year. It is top of mind for everyone right now.

Landlords are wondering if they have enough in security, and tenants are wondering how much they need to put down as security. We generally see a larger number up front, usually 3-5 months, although the spread can vary anywhere from 3-12 months! Depending on your financials and other factors, there’s some room to negotiate.

In an initial move-in, the landlord needs to get to know their tenant and see if they are in fact, a good paying tenant. In addition, there are costs involved in a new lease including transaction costs, concessions, and build-out of space. The landlord wants to protect these costs by requiring a larger number upfront in the security deposit.

So, how can you negotiate from a position of strength in the security conversation, and how do you make sure as much stays in your pockets as possible?

The landlord doesn’t want to lose you over a security deposit, so here are some things you can do.

First, get a letter of credit or LC. This offers peace of mind for the landlord and only costs you about 1-2% a year to your bank.

Another option is to burndown your security deposit. As you become a better paying tenant, the landlord may willingly allow you to burndown your security deposit. This must be asked for, it won’t likely be offered.

Make sure that burndown is included in every lease negotiation that you have! Recognize that you need to provide financials to your landlord and make sure you have this ready going into a lease negotiation. If they see that you have strong financials, it’ll work to your advantage.

Start early, start the conversation upfront, and remember that key dates are important. If you haven’t read my blog on key dates, you can do so here.

Watch the full episode of this video here and learn about one of my biggest lease negotiation success stories. Any questions? Message me and let’s chat!

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