Questions to Ask Landlords When Leasing Retail Space

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As you search for retail space you will find that landlords operate their retail shopping centers differently. Meaning they don’t all do the same thing. That is why it’s important to understand the nuances of how each landlord manages their retail center, what costs they are responsible for, what costs tenants responsible for, etc. To help get you started below are a few questions to ask landlords when leasing retail commercial real estate.

1. Who owns the retail shopping center? – Are you dealing with a local individual owner, and institutional owner? I ask because you would not negotiate the same way with an individual owner as you would with an institutional one. You have to adjust your negotiation strategy.
2. How long have they owned it? – The owner is either a holder or a flipper. If they are a holder they will want to keep it longer and increase the value. They may be more negotiable. If they are a flipper they may make some quick improvements, increase the value, increase the rents, and resell for a profit. New owners may not be as realistic with rents especially if they bought at a high price in a hot market. Long time owners maybe more realistic with market rates and be able to offer lower rates since their basis is lower.
3. What are the actual operating expenses for the center for the last 3-5 years? – This will give you an idea of how well they have managed to keep the common area maintenance charges to a minimum. If you see a pattern of the operating expenses going up and up and up then you might want to look at other options. They don’t have any control over taxes however they should be doing a good job of keeping their common area maintenance (CAM) charges low.
4. Who is the largest tenant (aka anchor tenant)? – The anchor tenant is typically the one who attracts the most traffic. If they leave how would that effect your business? You want to confirm that they are staying.
5. Who were the last two tenants to move out? – Were they not happy with the landlord? Did they go out of business, Why did they move out?
6. Which tenants just moved in? – Go talk to them and find out how their negotiating experience was with the landlord.
7. What is the signage criteria? – Signage is expensive so make sure you understand what will be required so you can get an estimate of costs for your budget.

These are just a few of the questions you should ask landlords when renting retail space. If you have any questions or would like help searching for retail space in Austin, Tx feel free to give us a call at 512-861-0525

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