Matthew Bordwin, managing director and group head of the Real Estate Services team,was quoted in Christopher Steiner's article in Forbes Magazine

February 2, 2009

Matthew Bordwin, managing director and group head of the Real Estate Services team with KPMG Corporate Finance LLC, was quoted in Christopher Steiner's article, "How to Renegotiate Your Lease," in Forbes Magazine.

In this current market downturn where variable costs are being cut, even lease agreements are open for negotiation. What kind of deal can you cut? Bordwin says that lease reductions can be anywhere from 5% to 50%, and breaks of 30% are not uncommon."What it comes down to for the landlord is this: Would they rather take a 30% reduction in rent or simply take zero?" he says. "They usually opt for the 30% break."

You may have to whip out your books to plead your case, advises Bordwin. "Landlords know that they probably need to consent to some form of a rent reduction if they want to keep tenants in this environment," he says. "There aren't many idle threats being made today. So many businesses find themselves in trouble."

Another negotiating lever: "Tenants can walk down the street and throw a dart and find empty space elsewhere," says Bordwin. "And it's likely that the other landlord will find a way to get them in."

Due diligence helps, too, so know the market. A landlord with a glut of empty space likely will be more willing to cut a generous deal. "The landlord with a Circuit City and a Linens 'n Things can't afford another tenant leaving," says Bordwin. "He's already behind the eight ball."

Even relatively healthy renters can press their landlords for breaks. In this economy, stability is a coveted asset. "The stronger tenants, historically, have not gotten rent reductions when they've asked," says Bordwin. "But now, [even they] are having an easier time getting their rents lowered by simply asking. Nobody wants to lose a paying renter right now because it could take months or years to refill that space."

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