Leasing commercial building

[Stephen Whittle]

Hello BP,

My brother and I are starting an escape room in Peoria Il and are looking at commercial buildings to rent. We are trying to decide if we need a realtor to help us out with the renting process.  My brother and I have no experience with commercial leases. Would you be able to give any advice about what we need to look at and where or not getting a realtor is necessary for renting.  Thanks so much!

-Stephen

[Cherie Ganesh]

I'm a commercial broker in Memphis and have done lots of tenant rep work over the years.  I believe it's in your benefit to find a good local commercial agent who can show that they have experience in leasing activities.  As a broker I usually also recommended that the tenant use an attorney to do a review of the legal terms in the lease and let him explain those to the client.  You will find a lot of very confusing language in most commercial leases with insurance language being some of the most antiquated language in existence.  I even suggest that they ask their insurance agent to review the insurance clauses to assure that you can actually perform under the language or will the cost be prohibitive to you as the tenant.  There are also many different types of commercial leases: net leases that have base rent and tenant is responsible for their share of taxes, insurance and common area maintenance; gross leases that have all costs built into rent and a base lease year rent increase calculation is set up to deal with increased landlord expenses; and blended leases that can mix these two basic types of commercial leases.  Language involving what improvements landlord will be doing and what you will be doing and what info you need to provide landlord has to be negotiated along with what is actually included in common area maintenance.  In addition to commercial brokerage I did store development for a national retailer for ten years and can't tell you how much crazy language we saw across the U.S.  It's never as simple as a residential lease so you need a good representative helping you with landlord negotiations of the business points of the deal and then a good attorney to review the lease to assure that there are no onerous requirements in there "just because" landlord has used the same lease for 50 years.  I am a CCIM which is a highly respected certification a commercial real estate person can obtain.  I know there are good folks in St. Louis who can be a assistance.  I highly suggest you check out possible agents by going to www.ccim.com and look for a member.  It gives you the opportunity to search in your market area and also by type of agent.  I would look for folks who show they have retail experience then look at their profiles that appear when you click on their name.  If you don't easily find someone, please let me know and I'll see who might be someone for you to call.  I know this is long, but hopefully it will help you see how complex commercial leases can be and this has only scratched the surface.  Good luck in your endeavors and I hope all goes well for you.