Why do landlords typicaly charge more when leasing to national credit tenants?
Just wondered if someone could explain this to me.
[{"id": "i2nif07", "text": "usually, rental rates for national (retail) credit tenants tend to be lower than non credit tenants.", "replies": [], "depth": 1}, {"id": "i2nkpl1", "text": "The only reason that I can think of would be that national credit tenants tend to be very specific as to their requirements. Lower quality tenants would be more likely to be less demanding.", "replies": [], "depth": 1}, {"id": "i2nmyq0", "text": "Credit tenants usually require higher capex, tenant improvements and leasing commissions. This gets pass through to rental rates", "replies": [{"id": "i2oc29d", "text": "this is the answer.  larger companies have a TI package which is usually above standard, and a national broker that bumps the commission.  of course this gets passed thru on deals.", "replies": [], "depth": 2}, {"id": "i2rgqvv", "text": "not 100% true but they are much less budget limited too.  Mom and pops tend to start with a budget and find the best property they can in the budget.  Nationals tend to go the opposite way and have a list of criteria that must be met or are important even if not all met.  If you check all the boxes they will pay you for hitting them all.", "replies": [], "depth": 2}], "depth": 1}, {"id": "i2noaf3", "text": "Because they can", "replies": [], "depth": 1}, {"id": "i2o2wsp", "text": "Well, they don\u2019t, all other things being equal. National credit tenant = lower risk = lower rates. Higher risk, lower credit, lesser known tenants = higher risk = higher rates.", "replies": [], "depth": 1}, {"id": "i2ogenl", "text": "Correlation is not causation", "replies": [], "depth": 1}, {"id": "i2pp06l", "text": "I have many credit Tenants as Tenants: Taco Bell, Starbucks, 7-Elven to name a few.\n\n1. Often there is no broker involved if you already have contact with the real estate director for the region.  This removes commission.  I have three 7-Eleven Tenants.  Leases were done through the corporate office.\n2. Credit Tenants tend to have strict site criteria.  Thus, may not suit your space/property.  They may ask for TI or Landlord work, however this can be negotiated depending on the Tenant.\n3. In general, rent rate is at market.  But, it's highly dependent on location.  I'm in DC and they all pay market rate.  I do not offer TI.  I also have a few credit Tenants 50-60 miles outside of DC and they pay slightly below market rate.\n4. Most credit Tenants want a combined 20 year lease (I've found they will accept 5/5/5 or 10/5).  This is not always optimal for a Landlord.  Properties may be slated for redevelopment, etc.  All situational.\n\nAs with any Tenant there are pros and cons.", "replies": [], "depth": 1}]