The following Q&A was completed as part of our conversational Commercial Real Estate FAQ Interview Series, we hope you find it helpful:
Before attempting the negotiations process yourself as a commercial real estate investor interested in a retail space, look into representation from a professional broker. Working through the negotiations with the knowledge and experience of a broker behind you will let you know you’ve accurately assessed the conditions of the space, and how you can approach the negotiations going forward. Payment for a broker doesn’t need to come out of pocket, as the owner of the property will recompensate.
Richard Wilson: What are some negotiation tips for those looking to secure commercial retail space for lease?
S.L. Van Der Zanden: Number one – I recommend getting a tenant rent broker, getting a broker to represent you. Trying to be an expert at something like this on your own, there’s no upside. The owner of the property is going to recompensate your broker, so you’re not even coming out of pocket for it. They’re then going to be able to give you lease comps on what rates are being paid by similar uses in the general area, they’re going to be able to help you to assess the condition of the space, and how to get what you want out of it. Before the lease gets signed, figuring out what’s lacking and getting, hopefully, the landlord to pay for that. Whether that’s a cash or abatement of rent that compensates you for paying for things, that’s part of the negotiation. Again, the broker will know how to handle that, and will be the best person to handle that part of it.