Lease Analysis in Commercial Sales

When selling commercial or retail property to the investment market as a real estate agent, it is very much the case that the existing tenant mix and lease profile of the property will impact the sale timing, strategy, and the eventual price to be obtained. So if you are a salesperson specialising in commercial or retail property, you should get very familiar with lease analysis and interpretation. Here are some of the things to be reviewed in a lease prior to any sale strategy implementation.

  1. Types of tenants and relative stability. Are they the types of tenants that a purchaser would see as adding value to the property
  2. Anchor tenants in the property and how much more time they have on their lease
  3. Tenant mix around the specialty tenants.
  4. Vacancy history in the property and any current vacancies
  5. Rent reviews coming up and the types of reviews. They may improve the landlords cash flow and hence the value of the property.
  6. Options coming up and the timing relative to sale. It sometimes pays to get these things done before the sale marketing commences.
  7. Any lease incentives that are still current and that may drag on the landlord’s cash flow. It is best to get these out of the way before sale.
  8. Recovery of outgoings in the lease and how they improve the landlords cash flow will be a factor in the sale.
  9. Make good issues and costs could have an impact on the landlord or the tenant. Check the lease to see just who is responsible for remediating the lease at expiry.
  10. Any supplementary rents and income should be identified. This can be licences for storage, car parks, signage, and similar income that improves the bottom line for the landlord

So if you want to sell commercial or retail property as a career, get used to reviewing and interpreting leases. It is a skill that will improve your chances of winning the landlords confidence and the listing.  You can get more information about lease analysis at http://www.commercial-realestate-training.com/

Author: John Highman

Commercial Real Estate Broker, Coach, Speaker, Author, Broadcaster.