|Image courtesy of Jeroen van Oostrom at FreeDigitalPhotos.net|
Tuesday, August 18, 2015
NO Deal Until the Contract is Signed
You have probably heard this old adage before.
You do not have a deal until the contract is signed.
And let us confirm this, once again for you.
Save this blog post and read it periodically. Print it out and frame it. Keep it fresh in your memory.
Take a look at the picture we used at the top of this post. Do you notice how the hand is hovering just above the signature line? Do you know what that means?
Our company was reminded of this very scenario several years ago with a company that has a global presence. Let’s call this company XYZ, Inc.
XYZ, Inc. had leased with our company for nearly 2 decades. They had gone through 2 expansions, one of which was a custom build-out.
About 9 months before their lease was set to expire, we heard from their in-house real estate manager. They went through some internal analyses and determined that their location within our business park was perfect.
We were told XYZ, Inc. was either going to move into a larger space with a substantial remodel or they were going to let us construct a custom-designed standalone building for them.
Back and forth we went with XYZ, Inc. over the specific size of each option, the floor plans within each, the length of the lease term, etc.
The 9 months until lease expiration came and went very quickly. Still, no deal was in place.
We had a very good relationship with the local manager and regional manager. Both managers and the real estate manager assured us that they were only looking at our property. So we extended the lease month-to-month to allow XYZ, Inc. some additional time to make their decision.
After all, we were told, XYZ, Inc. was so busy at the corporate level, a decision could not be made whether to go with one of our two options. How could they possibly pursue another property with a new landlord?
A few more months passed and we were very close to a deal.
Then, the phone stopped ringing and our phone calls were no longer being answered.
The local manager was clueless. He was being left in the dark too. Probably just the “corporate dance,” he assumed.
At last, the real estate manager took one of our phone calls.
He engaged in a lot of small talk, which was a little out of the ordinary. (At this point, we knew something was going on…)
As you can probably tell from our not so subtle foreshadowing, they had found another building that had recently become vacant. And it was right down the street from our property.
We called the local manager, and he was shocked. Nobody had told him.
The regional manager told us that this new building hit every box of their wish list. He had previously looked us right in the eye and assured us that they would be staying at our property. He shook our hands and told us he was excited to begin a new, long term lease. He liked the idea of remaining with the same landlord because he knew there would be no surprises.
What was his response when we asked him about these promises?
It’s just a business decision.
This regional manager had every intention of leasing from our company. They were excited about a build-to-suit and got far along in the discussions.
Then, XYZ, Inc. put a stop to all new construction and started cutting expenses. That meant the regional manager’s hands were tied.
Our company pulled out every trick we could to try to keep XYZ, Inc. at our property. All of our efforts, however, were to no avail.
XYZ, Inc. moved right down the street, and we pass by them several times a day.
Remember how we said to read this blog post periodically or print it out and frame it?
Our reminder of this lesson is driving by XYZ, Inc. every single day.
Although our story did not have a happy ending, it did come with a great lesson: You have NO deal until the contract is signed.
Please feel free to leave questions and/or comments. We read all of them. You can also email our company at firstname.lastname@example.org. We provide office space for rent and office/warehouse space for rent in Gulfport, Mississippi. If you need commercial real estate space in our area, please give us a call at (228) 575-7731 or visit our website at www.seawaybusinesspark.com.