All Forum Posts by: 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
 

Thank you @Tim Delaney, @John McKee and @Ronald Rohde. Your answers helped a lot!

Dear all,

please share your experience with dealing with tenant improvements - I have a few retail spaces in grey shell condition and would like to learn about how you do a lease-up that includes TI. It would be interesting to know:

- How do you define roles and responsibilities? Who is doing planning and managing of build-out? 

- Who pays for what and when? What other incentives besides a TI allowance are in your toolbox? 

Any recommendations and lessons learned are very welcome!

Thank you, Nikolas

Thank you very much - this is a great gift!

Dear all,

I am looking for a solid property management company for commercial MFH in Yakima, WA. Any referrals/experiences/suggestions?

Thanks a lot in advance, Nik

Dear all,

I am looking for a referral for a lawyer and CPA specialized in OZ investments in the Portland metro area. We have an upcoming investment in an OZ and need to verify eligibility and structure application process.  

Any good experiences in that field to share?

Thank you very much in advance, Nik

Hello,

I am looking for a referral for a specialized Opportunity Zone lawyer and / or CPA in the Portland, OR metro area. Eligibility of upcoming investment in OZ needs to be verified and structured. 

Any good experiences in that field to share?

Thank you very much in advance, Nik

@Anthony McEvoy

@Charles Dobens

@Evan Polaski

Gentlemen, thank you very much for your time and support! I learned something from you all and I really appreciate your effort.

@Anthony McEvoy thank you for your fast reply!

I am still confused and maybe it is less about the P&L and more about calculating the NOI, or more precise what goes into the expense section. Is renovation cost considered to be a nonrecurring value add expense and not capex nor operational expense and therefor does not go into main expense section and not into calculation of the NOI? Then it would only affect cash flow and not value of property. If that is the rational I understand what the seller is doing.

Oh boy, I am confused:

I was looking at a P&L statement of a 40+ unit MFH and noticed that seller did not include significant renovation costs to update units each year in the expense section. Those expenses were later subtracted from the NOI to show the final income.

Shouldn't those renovation costs for the replacement of all kinds of interior items appear in the expense section to come to a more accurate NOI? Or is this just usual practice to single out renovation costs - and why would that be acceptable?

Thank you in advance for sharing your experience!