What guides you in negotiations with retail lease broker?

[Nikolas Engel]

Dear all,

this is the situation: We are in process of buying retail space and have a first meeting with the lease broker who did a great job with existing leases for the property about 5 years ago. There is also quite a bit of vacant space in unimproved conditions that we need to rent out after closing and tomorrow's talk will define terms and conditions between us and the broker.

The draft listing agreement lists 6% commission of total rent for first 5 years plus 3% for total rent for second 5 years. The lease broker also wants exclusivity for the property but seems open if we now predefine potential tenants we would like to bring in on our own. 

I see great value in working with a professional lease broker and have no problem in taking over those terms, especially since he negotiated great leases in the past. But I also want to cover all my bases, we are in a different market compared to 5 years ago. And I want to minimize any newbie mistakes. I only know a little at this point and I am sure there are experienced retail space owners who can share their experience/practice.

Questions to owners of retail space: 

- What is important to you in such negotiations? 

- How tight do you define terms of any future lease (rent/psf, duration, options, tenant improvement etc) ?

- Do you do your own research on market rent or trust the broker to negotiate best deal?

- Do you accept an exclusivity clause? Do you restrict them to a certain period of time, e.g. if broker fails to lease up space in a certain period of time he loses exclusivity?

- How do you negotiate commission? Are the above commissions pretty standard in the industry?

- Anything else you would like to share? 

Thank you all in advance! Just to get an impression on what guides other retail space owners when leasing up their space really helps a lot!

Nikolas