Commercial Lease for retail/office

[Christie O'Malley]

Hi All, 

Late November, we purchased a property that is considered mixed use in Chesapeake, VA. Along with residential units, there are two stand alone commercial units. The units are up for renewal soon and I am in need of a retail/office space lease to send to the current tenants. The current lease is very vague. With that said, I reached out to a Commercial Attorney but we have been waiting for over a month for a lease. With the renewal being in February, does anyone know where I can get my hands on a lease that would fit this criteria?

Thank you kindly, 

Christie

[Joel Owens]

Does your lease have ongoing annual, semi-annual reporting of business sales and the tenant's personal finances? When it's a mom and pop tenant you want to keep a pulse on how they are doing personally and also the health and performance of their business. The investment grade credit tenants already have credit companies like Standard and Poor's doing that to rate them so easier to find and less ongoing oversight as a landlord.

For commercial I pay an attorney each time. Well worth the cost upfront for the good ones. If you ever want to sell the next purchaser will appreciate everything in a nice presentation and will likely make it easier to get a good loan which usually translates to a better price on your exit.

Let's say you can get the tenant to 12 a foot as an example.

3,000 sq ft space at 9 bucks NNN is 27,000 a year NOI. 27,000 a year exit at 6 cap before resale costs = 450,000 sales price

3,000 sq ft space at 12 bucks NNN is 36,000 a year NOI. 36,000 a year exit at 6 cap before resale cost = 600,000 sales price

Additional 150,000 value achieved moving from 9 to 12 bucks a foot.

Commercial and stabilized value is all about the true NOI when you sell. Now sellers can come up to different NOI number than buyers on analysis to justify what they want to buy for but that is another discussion for another day.

If you really want to know what tenant demand is for your market a commercial retail leasing broker can do a (void analysis) report to see market conditions.

Your current tenant might be only thriving so long because of the lower rent they are paying. That is why you need to shine a spotlight with personal and business financials to see what is possible for them.