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Negotiate 1-2-3: Negotiating How to Negotiate
Pair A: Context
Some time ago, colleagues and I videotaped real estate professionals negotiating a long-term deal scenario involving a shopping center about to be built. Participants played the role of either the local developer or a national retailer who might anchor the new mall. We stipulated that most provisions in the agreement had been worked out, but the parties were still deadlocked over the use, assignment, and subletting clauses. These provisions would define the parties’ respective rights and responsibilities regarding the space for a decade or more.
It is important to note that anchor tenants are in the stronger position in such negotiations. Here the developer needs to get at least one big-name store in order to secure financing and attract smaller retailers. He thus wanted some control over how the leased space would be used, so that the anchor tenant wouldn’t compete with other stores in the mall. In turn, the tenant insisted on having flexibility to adapt to changing market conditions.
In our scenario our participants were told that they had been called in to try to resolve the conflict over control and flexibility. We wanted people to be themselves, so our instructions were simple: Figure out what you want to get, we told them, and figure out how to get it. As you’ll see, much more is going on than simply hammering out the legal language in the lease. Even in simulations, emotions sometimes leak out and people may jostle for power.
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