Commercial lease negotiations

[Anna Shan]

Hi,

I have a small strip center, 3 spaces, newly build shell. Location is pretty good, 30 seconds to interstate high way exit, 1 minutes to mall, and walking distance to supermarket and some national chain stores. I have someone try to rent it now, offer rate is low than what I asked but negotiable. The thing I am not sure is, he wants me to cover the permanent thing that will stay with property after he move out. For example, restrooms, office, ceiling, wall, tiling on floor and improvement of the sign board outside. What should I reply to this request? Or I do some of theses and rise price? It is very good location and not many properties available nearby.

Also he asks for several month free rent, what is a reasonable number landlords normally do?

Another question is, this person wants to rent all spaces, should I go with 2-3 tenants or one will be fine? I feel 2-3 tenants might be able to share the risk?

Thanks for all replies.

[Joel Owens]

If you want to do this right you need to pay a leasing broker or at the very least a commercial retail attorney to help you with this.

If you want free advice it will be exactly worth what you pay for it. WHY? Because what you are wanting help with people charge hundreds to thousands of dollars an hour for their time.

With a lease you are setting up long term value and success for your property. If you negotiate a 5 year lease with a single tenant for primary term and then want to sell in 2 years hardly anybody will want a 3 years remaining lease. Conversely if it's a 10 year primary term lease and 2 years in and you want to sell then 8 years remaining which many lenders will still give good loan terms on and many buyers would find favor with.

There are over a hundred reasons why you need help but negotiating leases can have tons of moving parts on the commercial side and is not to be taken lightly. Some potential tenants seek out newbie or uninformed landlords and try to take advantage. Once that lease is signed they have you and won't want to change for anything.