Commercial
Sellers & Landlords
We were founded with a strong commercial focus and we’re dedicated to providing excellent service with an emphasis on integrity and local market knowledge. No matter your commercial real estate need we’re glad to assist you along the way.
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before you sell
Examine Your Position
It’s important to be aware of your needs upfront in order to know which areas you can negotiate in and which you can’t. Do you have debt that needs to be paid off? Will you incur a high tax liability by selling? Do you need to continue to occupy space? Are you able to invest your proceeds reasonably in the current market? Our knowledgeable agents can assist you in gathering answers to all of these questions and more!
Explore Your Market
The real estate market follows a very predictable cycle of ups and downs which gets further broken down by property type. Multifamily could be declining while Industrial is on the upswing. Take a look at other similar properties, what they are selling for, and what they sold for three years ago. Are there properties like yours readily available on the market or is demand higher than supply?
Clean up for success
With few exceptions, the simplest way to get more out of your property is to ensure the property shows well. Tall grass and yard debris start working against you before a prospective buyer even walks inside. In some cases, a fresh coat of paint will pay for itself ten times over. Removing clutter and organizing (in the event you still occupy the space) makes the space look bigger and more attractive.
Hire Representation
Selecting a broker to represent you in the sale of your commercial building is crucial to getting the most market exposure and, consequently, the most favorable possible outcome. Our agents work diligently to add value at every step of the process with pre-listing recommendations, expansive marketing efforts, and the expertise to guide you through contract negotiation.
COMMON LEASE TYPES - EXPLAINED FOR LANDLORDS
In a typical Triple Net (NNN) lease, the Landlord will pay the bill for Property Taxes, Building Insurance, and Common Area Maintenance. At the beginning of each year, the Landlord estimates the totality of these expenses, divides them by twelve months, and bills the tenant monthly for their pro-rata share (e.g. 50% of the building gets 50% of the expenses). At the end of the year or beginning of the next, the Landlord will perform a Reconciliation of actual cost incurred and additional rent paid by the Tenant. An overpayment results in a rent credit and an underpayment results in an additional bill to the Tenant.
PROS
From a Landlord’s perspective, NNN leases shift much of the risk of increased expenses to the Tenant which results in a much more consistent and predictable cash flow.
CONS
NNN leases get complicated from an accounting standpoint when determining what expenses can be passed along to the Tenant and which can’t. The extra accounting involved in these leases is often cost-prohibitive in smaller leases. In the case of Tenant underpayments, Tenants who are not yet well established may have a hard time coming up with additional un-budgeted funding.
Modified Gross (MG) leases are the middle ground in the world of leasing. Much like NNN leases, these are typically structured with the Landlord paying Property Taxes, Building Insurance, and Common Area Maintenance out of pocket. Unlike NNN leases, however, the Tenants will only be responsible for paying for one or two of these back instead of all three. In some cases, rather than monthly payments and an annual reconciliation, the Tenant will reimburse the Landlord for the full amount due at the time the cost was incurred (e.g. pro-rata share of property taxes all in the month of November, when paid).
PROS
Modified Gross leases take some of the accounting work out of NNN leases, especially when Common Area Maintenance is borne by the Landlord, as Property tax and insurance tend to be much easier to estimate.
CONS
Because of the fluctuating nature of expenses, the Landlord takes more risk with each additional service they agree to pay for. Because of this, Landlords often compensate by increasing the base rent amount to make up for future increases. This increase in base amount may make some prospective Tenants uncomfortable or unable to reach an agreement.
The simplest of the leases discussed here is the Gross lease. In its true form, a Gross lease is a lease where the Landlord pays for all Property Tax, Building Insurance, and Common Area Maintenance with no Tenant reimbursement. Gross leases are most common in situations where both the Landlord and the Tenant are mom-and-pop styles as accounting is minimal – The landlord pays the bills and the Tenant pays the rent. Tenants may still be responsible for certain maintenance items within their suite or as defined in their lease that they pay directly to the vendor.
PROS
Gross leases are the most simple from an accounting standpoint, requiring no reimbursements. Tenants are usually happier knowing upfront just how much they will have to pay.
CONS
The Landlord assumes all responsibility for the increase in expenses in a Gross lease. Therefore, in times of high inflation or rising prices, the Landlord may significantly narrow their profit margin or even end up going backward when expense increases outpace rent increases. Because of this, Gross leases are best used only on short-term lease agreements.
