Becoming Trader Joe: How I Did Business My Way and Still Beat the Big Guys

by Patty Civalleri

Given the need for long leases, landlords and tenants are trying to outguess each other about the objective future (for example, the business cycle, as opposed to the subjective futures of the parties, the commercial success of the tenant, the demand for the space offered by the landlord). Programs of collaboration should focus on offering some form of relief to the landlord if the objective future runs in the tenant’s favor, while maintaining some degree of protection for the tenant if it runs against the tenant. This is obvious, but mass hysteria usually dominates real estate markets. California plunged from a leasing frenzy to what amounted to a leasing moratorium from 1989 to 1994. In 1998, it was frenzy time again. The point is this: tenants who enter into negotiations with the idea of beating the landlord at the objective future game usually get the kind of landlords they deserve. And vice versa.