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Two-party negotiation between a shopping center developer and a prospective anchor tenant over the terms of the proposed lease's "use, assignment, and subletting" clause
Discount Marketplace, one of the largest discount soft goods retailer in the country, has presented its standard lease to Hawkins Development a regional real estate developer. The developer found most of the lease acceptable, after modifications of some provisions. However, negotiations are at an apparent impasse over the "use, assignment, and subletting" clause proposed by Discount Marketplace. In-house leasing representatives from both parties have been asked to resolve this dispute and to finalize the lease.
This exercise is designed as a one-on-one negotiation but also works well with teams of two representing each side. Individual preparation requires about 15 minutes, whereas teams of two will need slightly more time to coordinate a strategy. The negotiation should take from 20-35 minutes and a productive debriefing can take an hour or more.
The Negotiation of a Commercial Lease video is based on this simulation, and is a useful supplemental tool for debriefing. Instructors also may wish to view the first video in the Program on Negotiation's Negotiation Pedagogy Video Series (Professor Michael Wheeler, Harvard Business School), which depicts an experienced negotiation professor using the Negotiation of a Commercial Lease video in an actual Harvard Business School class.
- Relationships are important in this case. A long-term lease means a long-term relationship; which will enhance a good working rapport.
- This case is a good vehicle for exploring each other's interests and designing creative options to solve the leasing problem.
- Discussions should focus on the potential for transforming an apparent zero-sum problem (in which the developer wants use restrictions and the prospective tenant wants a free hand) to one in which joint gain is created. Participants should be encouraged to relate the substance of their agreements to the process by which they uncovered interests and generated options.
For all parties:
- General Information
Confidential Instructions for:
- Discount Marketplace
- Hawkins Development
- All of the Above
BATNA; Closure; Communication; Interests, dovetailing; Lawyering; Legitimacy; Relationship; Risk aversion; Risk perception; Time constraints; Trust
Negotiation Pedagogy Video Series, Part I
This unscripted video, available separately, shows PON faculty member Michael Wheeler running and debriefing the "Discount Marketplace and Hawkins Development" exercise, interspersed with excerpts from a post-workshop interview with the instructor.
Order the video here.
Discount Marketplace and Hawkins Development Attributes
|Time required:||30 minutes - 1 hour|
|Number of participants:||2|
|Neutral third party present:||None|
|Teaching notes available:||Yes|
|Non-English version available:||German, Spanish|
- Filed in:
- Bacow, Lawrence, Business and Commercial, Contracts, Real Estate, Role Simulations, Top 5 Simulations for Teaching in Law School