October 19, 2019
You are about to go on a property tour and look at some spaces for lease because you need new space. You know the physical parts of a property your business needs to thrive like power, ceiling height, or loading access, but what if you knew that one creative question to ask during your tour that would tell you what you needed to know to turn a decent deal into an incredible one? Well Here are 8 of those questions. But be careful, if you use them, they will work.
- What are the Landlord’s #1 ideal transaction terms? When you understand the landlord’s best case scenario, you will better understand the deal points you can win and the points you can’t. Instead of asking “what’s the rent” after walking through a building, ask, “who is your best case tenant, your ideal terms, and why do you say that?” and let them talk about it. You might find out a hidden motivation, or perhaps that your use is the only one that works for the building. That gives you leverage.
- #2 Will the landlord give an option? There are no standards when it comes to negotiating options in leases. Some landlords give them freely and some never do. Finding out what the landlord is comfortable with up front gives you leverage later on.
- What are the #3 landlord’s long term plans? Some landlords love risk and get creative to make a deal happen, and others hate risk and only do easy deals - the landlord also may want to sell the property in the near future, and each of these plans will give you an idea about what the landlord really wants to do, and if you structure a deal around what they want, you can use that knowledge to your advantage and get what you want.
- #4 When will it be available? Just because a building is vacant does not mean it is available right away, and just because a tenant occupies the entire space does not mean that they will take a long time to move. Find out when the landlord will commit to having the space clear, and hold them to that commitment.
- How much will the landlord contribute to #5 tenant improvements? Landlords will often times give some money to tenant improvements, but there are no There are no standards on how much work a landlord will do. Every building and every market is different, just don’t make the mistake of not asking.
- One of the most overlooked questions that tenants miss when committing to lease space is asking for #6 free rent. Landlords are willing to give it but probably will not offer unless you ask.
- Which expenses are the landlord’s duty and which ones are the tenant’s #7 Who pays for what?? Don’t assume what someone means when they say “triple net” or “modified gross”. ask for a list of what the landlord is willing to cover before you get too far down the road.
- Does any other entity have a right or access to this space #8 does anyone else have access?? Sometimes an easement is running through the parking lot, or a neighboring tenant has an option purchase or expand into your space. It isn’t common, but you want to know.
You may not need to ask all these questions in your initial meeting, but if you are aware of the questions you will be much more observant and your showings and tours will be much more effective.
We have a download below where you can print this page and use it whenever you walk through a building.
This is the CRE Coach, and together, we just // lifted the hood on commercial real estate.