Leasing commercial property

[Pelado]

I'm in the process of selecting a new property to lease commercially. This is a first time for me since I've always just sublet in the past.

I'd be open to wisdom you have obtained regarding commercial leases including, but not necessarily limited to the following:

Selecting the property
Lease terms and contract particulars
Subletting rights

Come now, ladies and gentlemen, and wow me with your insights.

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[Pelado]

I'm in the process of selecting a new property to lease commercially. This is a first time for me since I've always just sublet in the past.

I'd be open to wisdom you have obtained regarding commercial leases including, but not necessarily limited to the following:

Selecting the property
Lease terms and contract particulars
Subletting rights

Come now, ladies and gentlemen, and wow me with your insights.

Sent from my SM-G930V using Tapatalk

It would seem that CougarStadium is devoid of wisdom. Can't say I'm surprised.

[falafel]

We are all poseurs.

[PaloAltoCougar]

I haven't responded because I'm lazy and I'm also slow and didn't understand the question. Do you propose to buy a commercial property and lease it to others? Or are you simply looking to go from being a subtenant to a primary tenant?

[falafel]

I haven't responded because I'm lazy and I'm also slow and didn't understand the question. Do you propose to buy a commercial property and lease it to others? Or are you simply looking to go from being a subtenant to a primary tenant?

If you could just infodump any and all knowledge you have regarding Pelado's three very vague and general subject areas without asking follow-up questions, that would be great.

[Pelado]

If you could just infodump any and all knowledge you have regarding Pelado's three very vague and general subject areas without asking follow-up questions, that would be great.

Agreed.

I haven't responded because I'm lazy and I'm also slow and didn't understand the question. Do you propose to buy a commercial property and lease it to others? Or are you simply looking to go from being a subtenant to a primary tenant?

Sadly, just becoming a primary tenant. Do I have to paint the space in red, yellow, and blue?

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[PaloAltoCougar]

OK, I'll throw just a couple of thoughts.... I wouldn't know how to advise you concerning property selection as that will be function of the market, including type of use, location, price considerations, etc.

With respect to lease terms, you can find lots of commercial lease checklists that provide a good tutorial on what to consider or worry about (one example). Price and lease term, of course, are the first things people worry about, with the length of the lease often governing the remaining terms. For example, the longer the lease, the more likely the tenant will be responsible for certain types of maintenance, but that's usually a major point of discussion. If a tenant assumes significant maintenance obligations (e.g., maintaining the HVAC system), before signing the lease the tenant should engage a property inspector to determine if everything is in good working order with no looming repair or replacement needs.

With respect to subletting/assignment, that varies from one lease to the next, although most provide that a sublease is subject to the landlord's prior consent, "which shall not be unreasonably withheld." Many also require that the tenant/sublessor pay over to the landlord some, or even all, of any rent premium the tenant receives from the subtenant in excess of the then current rent for the sublet premises.

BTW, I've had to review many dozens (hundreds?) of leases and that's among the most boring and tedious assignments I have to take on. Still, if you have any specific questions, I'll be happy to respond further, reserving the right for a response to be a simple "buzz off." Unlikely, though.

[Katy Lied]

is commercial office leasing ever going to come back, after Coronavirus has shown us that companies can work from home more easily than previously thought? When all the big millenial companies based on office sharing and business incubators have gone down the drain?

[Moliere]

My advice is to make sure the location is good. Location, location, location.

I'm sure you are glad you asked me for my advice

[Pelado]

OK, I'll throw just a couple of thoughts.... I wouldn't know how to advise you concerning property selection as that will be function of the market, including type of use, location, price considerations, etc.

With respect to lease terms, you can find lots of commercial lease checklists that provide a good tutorial on what to consider or worry about (one example). Price and lease term, of course, are the first things people worry about, with the length of the lease often governing the remaining terms. For example, the longer the lease, the more likely the tenant will be responsible for certain types of maintenance, but that's usually a major point of discussion. If a tenant assumes significant maintenance obligations (e.g., maintaining the HVAC system), before signing the lease the tenant should engage a property inspector to determine if everything is in good working order with no looming repair or replacement needs.

With respect to subletting/assignment, that varies from one lease to the next, although most provide that a sublease is subject to the landlord's prior consent, "which shall not be unreasonably withheld." Many also require that the tenant/sublessor pay over to the landlord some, or even all, of any rent premium the tenant receives from the subtenant in excess of the then current rent for the sublet premises.

BTW, I've had to review many dozens (hundreds?) of leases and that's among the most boring and tedious assignments I have to take on. Still, if you have any specific questions, I'll be happy to respond further, reserving the right for a response to be a simple "buzz off." Unlikely, though.

Thanks, PAC. I've requested sample leases from a few of the properties I'm considering. I didn't even make it past page 3 of a 28-page sample lease agreement before I started doing something else. While I haven't read about the subletting terms in the contract, the agent described their terms pretty much the same as you have, that they would participate in any surplus lease payments I receive from a subletting tenant.

A couple of the options are NNN leases, which may require that I pay a pro rata amount of maintenance costs. I hadn't considered having any inspections done. That's not a bad idea.

My advice is to make sure the location is good. Location, location, location.

I'm sure you are glad you asked me for my advice

Location is definitely a key in what I'm considering. I looked at a property today that is in a pretty good part of town, has a lot of nearby traffic, and would be really turnkey with what I need. One of the reasons it's low on my list is because the business park it's in is filled mostly with a local community college and a governmental agency. Even though it will have good signage options, none of my target market is ever likely to see the sign.

is commercial office leasing ever going to come back, after Coronavirus has shown us that companies can work from home more easily than previously thought? When all the big millenial companies based on office sharing and business incubators have gone down the drain?

I was expecting to find lots of inexpensive space that would work well for my needs. Unfortunately, there are very few places available that fit what I want. Of the properties that could work, there's not much that's been on the market for more than a month or two. So I'm not feeling like I'm in a very strong position to negotiate. But that didn't stop me from asking my current top choice to come down on the base rent charge.

[falafel]

is commercial office leasing ever going to come back, after Coronavirus has shown us that companies can work from home more easily than previously thought? When all the big millenial companies based on office sharing and business incubators have gone down the drain?

Of course it will. People don’t like working from home.