How to negotiate Merchant Developer(quality construction/Leases)

[Jay Gill]

I was looking to purchase a strip center. I was originally was looking for already constructed property. However I was approached by a Merchant Developer through an agent. He has a potential project of interest that he is planning on build out.  He has all the drawings and site already picked out.  He mentioned that he would be responsible for all construction and lining up tenants(he already lined up a major national tenant and he has relationships with a few regional ones).  Right now I have the flexibility of building it out to suit my needs(within reason).  

My main concern, after reading this site(thanks guys!) is negotiating the quality of construction and terms of leases he is planning to put in place.  I want to hold on to this property for awhile as I have my own business which I will take up in one of the units, so quality of construction is important to me as I do not want to deal with a leaky roof, low quality HVAC units etc.  Also in terms of tenant leases I want to put in ones that will make the property attractive which will give a favorable cap rate over the long run. I want to avoid being stuck with a tenant that is not keeping up with increasing lease rates.  

So right now I would like some advice on how to negotiate the quality of construction throughout the build process and what I should look for terms of retail leases that will be attached to property.  I understand there is some give and take in terms of leases and construction but I do not want to be stuck with a problem either.  So any tips or agreements that fellow members of this community could offer would be greatly appreciated. Thanks.