When it comes to making commercial real estate deals in California, negotiation is more than just a skill. It’s an art.
Commercial real estate deals can look like any number of things. At Bell Properties Commercial Real Estate, we have helped clients close on a multi-tenant office space, we’ve worked with owners to re-position retail assets in pricey California neighborhoods, and we’ve helped buyers make offers on competitive warehouse space close to industrial locations. We can tell you that the ability to negotiate effectively will significantly affect your return on investment.
Because negotiation is so important when an investor is buying, selling, or working with commercial real estate in California, we’re sharing some of the essential negotiation strategies that commercial real estate investors in California can use to navigate one of the most expensive and competitive markets in the U.S.
From pre-deal preparation to closing confidence, the commercial real estate team at Bell Properties is exploring what it takes to master the art of the deal.
Understanding the California Commercial Real Estate (CRE) Landscape
When investors can recognize what makes the California market unique, they have a better chance of negotiating and succeeding. We are always counseling the investors we work with to consider the following:
High Competition. California is full of competitive commercial real estate markets. Most people are well-aware of the high prices and limited inventory in cities like San Francisco, Los Angeles, and San Diego. Even some of the smaller markets throughout the state are magnets for institutional and international investors.
Regulatory Complexities. Environmental regulations, zoning laws, and other local ordinances vary by city and can impact deal structures and negotiations. This is one of the reasons any investor will want to work closely with professional property managers like the team at Bell Properties Commercial Real Estate.
Market Volatility. From tech booms in Silicon Valley to shifts in logistics in the Inland Empire, local market dynamics can drastically alter negotiation leverage. Wondering how the market in your target area is going to impact your own negotiations? Contact us and we’ll give you a sense of what to expect.
What we’re trying to explain is that a one-size-fits-all approach to negotiation won’t work in California. You need strategy, precision, and local insight.
Investor Homework Due Diligence to Understand Markets and Provide Due Diligence
In order to negotiate from a position of strength, it’s important to understand the market and how specific assets perform within those market cycles and dynamics. For example, it’s important to know the numbers. No real estate investor wants to enter into negotiations without understanding cap rates, NOI benchmarks, vacancy rates, and the range of local comps. Brokers and industry experts like us can help because of the insights and analytics we are always gathering. We advise investors on what similar properties have sold for and whether there’s the potential to attract good commercial tenants quickly.
Start strong in negotiations by studying the seller.
Are they under pressure to sell? Is it a long-time owner looking to retire, a REIT adjusting its portfolio, or a developer facing a loan maturity? Motivation is leverage and always informs how we approach a deal.
Not sure about how entitlements might impact negotiations? Contact us at Bell Properties Commercial Real Estate. In California, zoning overlays and environmental review (CEQA) can be deal-breakers or deal-makers. For example, an underutilized parcel in a transit-oriented zone might be worth far more than it appears on paper.
Build Relationships and Remain Professional
Negotiation does not have to be a winner-takes-all war. It should actually be a conversation with a goal. And in commercial real estate negotiations, relationships can help investors reach a more favorable result. Remember that transparency builds trust and dialogue leads to relationships and success. We never skip the small talk. A little rapport can lead to key intel or flexibility in terms.
Professionalism goes a long way. Being courteous and direct builds credibility. A seller is more likely to work with a buyer they trust to close without drama.
Leverage Time to Your Advantage
When it comes to commercial real estate negotiations, we are always reminding investors that time is currency. Here’s how we leverage time when we’re negotiating:
We know when to wait. If a seller seems to be overpricing an asset in a slow market, we will always be patient. Properties that sit too long often come back to buyers who initially walked away.
We know when to move fast. In hot submarkets like West L.A. or downtown San Diego, hesitating can cost investors the deal. Having due diligence partners on standby (inspectors, attorneys, architects) lets us act decisively.
In appropriate situations, we’ll add expiration dates to offers. It creates urgency and discourages shopping an offer to competitors. Investors who aren’t sure how to effectively understand whether timing is working for or against them are invited to contact us at Bell Properties Commercial Real Estate. We have a good sense of this.
Structuring Offers: It’s Not Always About Price
The highest price doesn’t always win in California’s competitive commercial real estate markets. Creative deal structures can make an offer stand out. Here are some brief examples of value-added terms that can be useful when negotiating:
Shorter due diligence period. This is especially attractive to sellers needing a quick exit.
Non-refundable deposits. Making such a deposit will demonstrate serious intent, especially if the seller is wary of unreliable buyers.
Seller financing. This type of financing can be useful in a high-interest-rate environment. We have seen it work as a win-win for retiring owners seeking cash flow without property management.
Communication and the Art of the LOI
The Letter of Intent (LOI) is where many negotiations are won or lost. It’s an important way of introducing an investor and their intention for the property they’re hoping to buy. It can be a powerful tool in moving a seller closer to a deal. We recommend that you:
Be clear and concise. Ambiguity leads to confusion and friction later. Any lack of transparency or dishonesty could kill the deal entirely.
Focus on key terms. Price, earnest money, due diligence period, contingencies, and closing date should all be mentioned in the LOI. This is a good chance to focus on what’s most important to an investor interested in a real estate asset.
Leave room to negotiate. This is not meant to be a manifesto. While proposing specific terms is a good idea, there’s no reason to be too strict. Use broad language where flexibility is needed, and be specific on what’s non-negotiable.
Investors who are unsure about LOIs and how to draft them should contact us at Bell Properties Commercial Real Estate. We always caution that LOIs are usually non-binding, but courts have enforced provisions if parties acted in reliance. Always consult a real estate attorney as well.
Know When to Walk Away
Walking away is one of the most powerful negotiation tools, and investors must be willing to use it. If the seller won’t budge on overpriced expectations, exit gracefully. If due diligence uncovers material issues (underground storage tanks, non-permitted structures, ADA violations), ask for price reductions or concessions. If rejected, be willing to walk.
Red flags include sellers who resist standard due diligence requests, rush timelines, or withhold information.
The Psychology of Anchoring and Framing
Behavioral economics plays a big role in deal-making, and the team at Bell Properties Commercial Real Estate is well-versed in this type of psychology. We focus on:
Anchoring. The first number in a negotiation sets the psychological tone. We make the first offer when we have a strong sense of value.
Framing. Present offers in terms that highlight benefits. Instead of “lowering price,” say “adjusting to reflect deferred maintenance uncovered during inspections.”
Soft issues and terms are about as important as dollars and cents. For example, consider tenant relationships. When buying occupied commercial properties, it’s important to understand tenant dynamics. Are there anchor tenants? Are there tenants who have been in place for decades? These things can impact valuation and negotiation.
Bring in the Right Team
Wondering who you need to complete a successful deal? Contact us. We can tell you who you need and even introduce you to key partners, including:
Commercial brokers.
Real estate attorneys.
Environmental consultants.
Architects or planners.
Close the Deal
Once a contract has been signed, the negotiation isn’t over. Final inspections, title issues, or lender delays can trigger further discussions. Stay calm, even under pressure. Last-minute hiccups are common. Keep relationships intact and professional. Even if a deal falls through, a professional and respectful approach can lead to future opportunities.
After closing, thank all parties involved. California is large, but its CRE circles are small, and a good reputation pays long-term dividends.
We always counsel investors to negotiate with intent. In California, the margin between a good deal and a great one is often found at the negotiation table. Mastering the art of the deal requires a blend of preparation, intuition, strategy, and emotional intelligence.
Remember:
Every deal is a puzzle. The best investors know how to align the pieces—financial, legal, emotional—to create a win-win.
Don’t just negotiate for today’s price—negotiate for tomorrow’s value.
In California’s fast-paced, high-dollar CRE environment, good negotiation skills aren’t just tools. They're a competitive edge.
We can help. Contact our team at Bell Properties Commercial Real Estate, and we will strategize on how to close the deal you want.
