Landlordholm Syndrome

Most people are familiar with the term “Stockholm Syndrome” which refers to psychological symptoms that sometimes occur in victims of a hostage situation.  The term originated in Stockholm, Sweden in the summer of 1973 when gunmen took four bank employees hostage and held them in a vault for over five days.  Surprisingly, when the hostages were finally freed, it became evident that they had developed an empathetic and emotional attachment to their captors.  While all common sense would tell them that the hostage takers did not have their best interests at heart and the legal authorities did, the victims came out sympathizing with the former and demonizing the latter.

Since 1973, this phenomenon of forming paradoxical attachments has been associated with numerous adversarial situations including kidnappings and personal crimes. One of the most famous victims of Stockholm Syndrome was Patty Hearst in 1974.  She not only formed an emotional attachment to her kidnappers, she ultimately joined their movement.

The fundamental characteristics of Stockholm Syndrome are:

  1. The victim develops a surprisingly adverse reaction to those who are trying to help them—the police.
  2. The victim develops a fondness, empathy and sense of trust towards his or her captors who put them in danger.
  3. The captors develop a fondness towards their victims.

While not every hostage or kidnapping victim experiences Stockholm Syndrome, there do appear to be some common factors in those who develop it.  Among these factors are:

  1. The victim and the captor are exposed to each other over an extended period of time.
  2. The victim and the captor are in close proximity to each other—when they are separated into different rooms, the phenomenon does not seem to occur.
  3. The captors show kindness to the victim. Again, the phenomenon does not occur when the captors show aggression, violence or anger towards the victims.

What does all of this have to do with real estate? We’re getting to that.

First—and this is very important– let us preface the balance of our discussion by saying that we in no way compare landlords to kidnappers, robbers or terrorists.  Overwhelmingly landlords are good people who are just running a business and trying to make a profit.  They develop long standing relationships with their tenants and, over the years, these relationships often develop into strong and meaningful friendships.  We certainly have developed similar bonds with our landlords and count many of them as good, personal friends.  Leases are long term partnerships between two businesses and the best ones end up with personal connections.

However, notwithstanding these friendships and personal connections, it’s important for tenants to understand that their financial interests are directly adverse to the landlord’s interests when it comes time to renew their lease (or enter into a new lease).  Landlords make more money when they obtain higher rents and dish out smaller cash concessions.  Tenants make out better when rent is lower and cash concessions are maximized.  It’s a zero-sum game.

Given the foregoing realities, common sense tells us that the best way for a tenant to ensure that it gets the best lease deal is to separate its personal feelings towards the landlord from the business relationship and compete its requirement in the open market.  Competition always generates better deal terms.  Despite this obvious truism, some tenants still fall victim to what we call “Landlordholm Syndrome”.

Like with hostage victims, tenants, after spending years in a landlord’s building, often develop paradoxical feelings.  Whereas the hostage victim believes the police are the bad guys and the hostage taker is the good guy, tenants sometimes allow themselves to believe that their landlord is looking out for their economic well being and that potential tenant brokers are the bad guys trying to damage their wonderful relationship. While a rational observer would understand that hiring a dedicated tenant broker to compete the lease requirement in the open market would be in the tenant’s best interests, the tenant suffering from Landlordholm Syndrome sometimes sees the broker as obstructionist or muddying the waters.  Thus, these tenants insist on doing a “friendly” deal with their landlord without engaging a broker and without creating any competition for their requirement.

Conclusion

Tenants shouldn’t make the mistake of confusing a landlord’s kindness and friendship for altruism.  Landlords ultimately must answer to their shareholders and investors so they have a duty to maximize their profits.  Because they are striving for completely opposite outcomes in the lease negotiations than tenants, it is unrealistic to believe that a “friendly,” non-competed lease renewal is going to achieve the best economic result for the tenant.  Before falling victim to Landlordholm Syndrome, tenants should take a step back and reassess who is really fighting for their best interests.

For more information contact Glenn Blumenfeld http://www.tactix.com/team.php#Glenn

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