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Retail Lease Help - I'm a potential tenant in a NNN Lease
Posted on 5/31/15 at 7:13 pm
Posted on 5/31/15 at 7:13 pm
If any of you have tips, I would appreciate it. I'm looking to lease a small space in a strip center that is marketed as a NNN Lease structure. The kicker is that this space tends to have a lot of vacancy and the specific spot has been vacant for at least 1 year. The strip had a Starbucks, Pizza Hut, Subway and Froyo, but other spots just don't do well.
My question is do you think there is any leverage on my side for negotiating a better deal than NNN, in addition to the lesser lease.
I'm sure more info is needed, but would be curious to know from any of you industry experts.
My question is do you think there is any leverage on my side for negotiating a better deal than NNN, in addition to the lesser lease.
I'm sure more info is needed, but would be curious to know from any of you industry experts.
6
Posted on 5/31/15 at 8:46 pm to Dodd
Get a commercial realtor that's not the listing agent
Posted on 5/31/15 at 9:13 pm to Dodd
Agreed. Hire a broker. Otherwise you're just paying the listing agent more to work for the landlord.
Posted on 5/31/15 at 9:21 pm to Dodd
Yes--ask that they pay the taxes and premise insurance and name you as additional insured. Ask that they cover HVAC repairs.
Ask for everything you can think of. All they can say is no.
I am not sure I would hire a realtor. That will add cost to you or the landlord one reducing the chance the money will be in your pocket.
Use a lawyer that can write you a lease and present that lease to the landlord as an alternative.
Ask for everything you can think of. All they can say is no.
I am not sure I would hire a realtor. That will add cost to you or the landlord one reducing the chance the money will be in your pocket.
Use a lawyer that can write you a lease and present that lease to the landlord as an alternative.
Posted on 6/1/15 at 2:35 am to Dodd
Yes - always room to negotiate and a broker can help.
Posted on 6/1/15 at 8:48 am to Dodd
In my experience, I'm not sure how negotiable the owner will be on the NNN lease, however, there may be other concessions he can make.
The last one of these I was involved in, was a similar situation - the spot had been vacant for a while, in a center that had been 50 percent full for a while. What we ended up with was basically this:
5 year lease
Before lease started, we had space for 3 months at no base rent.
Next, first three months of lease were 50 percent base rent, then last 57 months at full base rent
We were responsible for the NNN the entire time.
Landlord repaved the parking lot for about 50 spaces in front of our spot
Landlord fixed problems with roof over our lease
Landlord gave us some money for leasehold improvements (we had certain bills sent to him which he paid)
The last one of these I was involved in, was a similar situation - the spot had been vacant for a while, in a center that had been 50 percent full for a while. What we ended up with was basically this:
5 year lease
Before lease started, we had space for 3 months at no base rent.
Next, first three months of lease were 50 percent base rent, then last 57 months at full base rent
We were responsible for the NNN the entire time.
Landlord repaved the parking lot for about 50 spaces in front of our spot
Landlord fixed problems with roof over our lease
Landlord gave us some money for leasehold improvements (we had certain bills sent to him which he paid)
Posted on 6/1/15 at 11:19 am to I B Freeman
quote:
That will add cost to you or the landlord one reducing the chance the money will be in your pocket.
Unlikely. Listing agent has a pre-negotiated commission agreement with the landlord which stays the same whether the tenant has a broker or not. If the tenant has no representation, the listing agent just pockets the entire fee.
Posted on 6/1/15 at 11:51 am to LSUFanHouston
quote:
In my experience, I'm not sure how negotiable the owner will be on the NNN lease, however, there may be other concessions he can make.
I'd tend to agree with this. They're probably more likely to negotiate on your rate than they are the expense structure of a lease. Also a NNN vs a Full Service vs a Modified Gross lease doesn't necessarily mean one is a "better" deal than the other, the differences in the structure are typically built into the rent (i.e. a $16 NNN lease with $4 of expenses is the same as a $20 full service lease).
ETA: Retail Leases in general are NNN.
This post was edited on 6/1/15 at 11:51 am
Posted on 6/1/15 at 6:00 pm to Dodd
You wont' necessarily be getting a better deal by getting a gross lease vs net, but I'm more concerned about leasing this particular space. What type of business are you going to operate, can you give better details on the center as a whole? Any anchors at all? Lifestyle center set up? If your business is customer based then you might consider another center. If this center is suitable for your business in your opinion, then negotiate the initial base rent psf, free base rent for 1-3 months, and ask that the LL warrant the HVAC for the first year. Keep in mind that when tenants ask for more, LL expects a tenant with a quality financial resume and a longer term lease. You won't have much negotiating room with a 12 month as opposed to a 36...but, if you're not presenting strong financials the LL probably won't go beyond a 12 month at market rate.
I don't know how much info you are willing to share, but I can definitely give you additional advice if you would like it. Background: I'm an asset manager in the business.
I don't know how much info you are willing to share, but I can definitely give you additional advice if you would like it. Background: I'm an asset manager in the business.
Posted on 6/1/15 at 10:21 pm to hoginthesw
I really appreciate the advice everyone. While I don't care to get into any specifics, you asked all the questions that I'm thinking, and then some. The business would be new start customer based. We've got a lot of planning to do
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