All Forum Posts by: Khaled Seirafi

Hi there,

My family owns a mixed use building in San Mateo that we're thinking of selling in the not too distant future. It has 5 residential units and 2 commercial spaces. We have no problems renting out the residential units and one of the commercial spaces has been rented out on a NNN lease for another 2 years with a 5 year option to renew. However, we've been trying to lease the 2nd commercial space since last December with no luck. My question is does it makes more sense to leave it vacant before selling or make sure to have a tenant in there and then sell?

I recently asked a commercial agent and his opinion was that I should leave it vacant to cast the widest net for potential buyers, i.e. not to exclude business owners who would want that space for themselves but would also like to purchase the entire building to rent out. As you all know, commercial spaces have been tough to lease out. But do we run the risk of devaluing the property if that space is vacant and buyers and agents use the GRM to valuate the place?

I should note that we had a number of people contact us who represented business owners who wanted the space for their business but also were interested in purchasing the place. Any thoughts would be welcome.

To lease commercial space or leave vacant before sale

Hi there,

My family owns a mixed use building in San Mateo, CA that we're thinking of selling in the not too distant future. It has 5 residential units and 2 commercial spaces. We have no problems renting out the residential units and one of the commercial spaces has been rented out on a NNN lease for another 2 years with a 5 year option to renew. However, we've been trying to lease the 2nd commercial space since last December with no luck. My question is does it makes more sense to leave it vacant before selling or make sure to have a tenant in there and then sell?

I recently asked a commercial agent and his opinion was that I should leave it vacant to cast the widest net for potential buyers, i.e. not to exclude business owners who would want that space for themselves but would also like to purchase the entire building to rent out. As you all know, commercial spaces have been tough to lease out. But do we run the risk of devaluing the property if that space is vacant and buyers and agents use the GRM to valuate the place?

I should note that we had a number of people contact us who represented business owners who wanted the space for their business but also were interested in purchasing the place. Any thoughts would be welcome. 

Hi there,

My family owns a mixed use building in San Mateo that we're thinking of selling in the not too distant future. It has 5 residential units and 2 commercial spaces. We have no problems renting out the residential units and one of the commercial spaces has been rented out on a NNN lease for another 2 years with a 5 year option to renew. However, we've been trying to lease the 2nd commercial space since last December with no luck. My question is does it makes more sense to leave it vacant before selling or make sure to have a tenant in there and then sell?

I recently asked a commercial agent and his opinion was that I should leave it vacant to cast the widest net for potential buyers, i.e. not to exclude business owners who would want that space for themselves but would also like to purchase the entire building to rent out. As you all know, commercial spaces have been tough to lease out. But do we run the risk of devaluing the property if that space is vacant and buyers and agents use the GRM to valuate the place?

I should note that we had a number of people contact us who represented business owners who wanted the space for their business but also were interested in purchasing the place. Any thoughts would be welcome. 

So I have a vacant commercial space that's part of a mixed use building in San Mateo, CA. Would I be able to work out a deal with a listing agent that would allow me to pay the commission in multiple payments at the end of each year of a tenant's term? Seeing that times are uncertain and there's a risk to take on new tenants (especially in retail), I would hope that agents are open to that kind of arrangement. Plus, we're not expecting corporate tenants.

My second question is if a listing agent does agree to a multiple payment schedule over the course of the term (let's assume it's a 5 year term) and I decide to sell the property 2 years into the term, who would pay the remaining commission? Would I be responsible or would the new owner be?

Lastly, if I sign a lease with a tenant for 5 years with an option to renew for another 5, I'd only have to pay commission for 5 years of rent, right? If the tenant exercises the option to renew for another 5 years, is there a commission to be paid then?

So I have a vacant commercial space that's part of a mixed use building in San Mateo, CA. Would I be able to work out a deal with a listing agent that would allow me to pay the commission in multiple payments at the end of each year of a tenant's term? Seeing that times are uncertain and there's a risk to take on new tenants (especially in retail), I would hope that agents are open to that kind of arrangement. Plus, we're not expecting corporate tenants.

My second question is if a listing agent does agree to a multiple payment schedule over the course of the term (let's assume it's a 5 year term) and I decide to sell the property 2 years into the term, who would pay the remaining commission? Would I be responsible or would the new owner be?

Lastly, if I sign a lease with a tenant for 5 years with an option to renew for another 5, I'd only have to pay commission for 5 years of rent, right? If the tenant exercises the option to renew for another 5 years, is there a commission to be paid then?

So I have a vacant commercial space that's part of a mixed use building in San Mateo, CA. Would I be able to work out a deal with a listing agent that would allow me to pay the commission in multiple payments at the end of each year of a tenant's term? Seeing that times are uncertain and there's a risk to take on new tenants (especially in retail), I would hope that agents are open to that kind of arrangement. Plus, we're not expecting corporate tenants. 

My second question is if a listing agent does agree to a multiple payment schedule over the course of the term (let's assume it's a 5 year term) and I decide to sell the property 2 years into the term, who would pay the remaining commission? Would I be responsible or would the new owner be? 

Lastly, if I sign a lease with a tenant for 5 years with an option to renew for another 5, I'd only have to pay commission for 5 years of rent, right? If the tenant exercises the option to renew for another 5 years, is there a commission to be paid then?

@Mary M. Thanks for the info! I'll definitely look into Colliers. Just out of curiosity, where are your properties located? 

@Charles Carillo When you say that a smaller broker might not know how to value a larger sized property than they typically work with, wouldn't that be a disadvantage for me? 

@Steve Morris I think that that's probably the best and most efficient way to do it. I'm thinking that signing an exclusive agency agreement with the local SFO agent of a national chain would give me access to a larger network of agents within the same franchise in the markets I'm interested in. 

But since commercial agents aren't utilized by average investors as much as residential ones, and thus aren't reviewed as much online, how do you determine or scope out an agent with a lot of experience, the right connections based on the references from the local broker? One person recommended that I get some references from the Association of Realtors of the said state. However, I'm thinking that if a local agent is going to help with that, I'd want several agents to talk to. But any thoughts as to how to vet them? I get that they're vetting me as well, but it's kind of a catch 22 since I know nothing about them. 

Also, about 1031 exchange, you're saying that an agent would prevent me from changing (retrading) one of the 3 replacement properties or try to delay until I'm forced to consider that one property out of the other 2? Still don't quite follow. 

@Jingru Sui Thanks for the advice!