Should I use a broker to lease my commercial restaurant space?
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[{"id": "ie203ay", "text": "You will pay 6% of the net rent for whole term. If you are smart enough to have bought the property you can figure out the comps for rent in the area", "replies": [{"id": "ie22372", "text": "Do you mean a property manager? Or are you saying that for doing the lease initially they then get 6% monthly for the whole term?", "replies": [{"id": "ie24r9l", "text": "A listing broker will usually receive 3% along with an additional 3% for the lessee\u2019s broker. The aggregate 6% commission will be calculated as 6% of the total rent for the primary term. So, if the rent is $1k/mo for a 3 year term, or $36k total, the brokers will receive 6% of that as commission. \n\nThis is all highly negotiable. You can try to cap at 4%. Also you can cap it at solely base rent and not CAM + base rent. Lots of variables", "replies": [], "depth": 3}], "depth": 2}, {"id": "ie3gl4d", "text": "I don't pay anywhere near 6%. That's crazy. 5.5% for the first two years and then it goes down sharply in the later years.", "replies": [{"id": "ie3l063", "text": "Situation dependent of course. You are paying the tenant reps of national tenants at least 4% and your own broker 2%. \n\nDo it yourself and deal with locals only sure . You won\u2019t pay", "replies": [{"id": "ie3ol7s", "text": "I do probably 8-10 leases a year. Even in cases where the tenant's broker gets a full commission (unfortunately common these days), the combined commissions don't come close to 6% of the overall lease value. 5.5% for the first two years, then 4.5%, 3.5%, down to 1.5% for any remaining years.", "replies": [{"id": "ie5nywe", "text": "This is well below market no matter where you live", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ie206rz", "text": "I think it would be foolish not to use a broker if you have no idea what you are doing. Just make sure you use a good broker in the market not some Coldwell Banker type resi broker.", "replies": [{"id": "ie215nw", "text": "Go on costar and you can usually find the top retail leasing brokers in the area. If you want to attract a national type tenant, they usually have a broker and most likely will be paying a fee anyway.", "replies": [{"id": "ie2fvhi", "text": "Costar? This guy has no clue what local rents are, you think he has access to Costar?\n\nGet a commercial broker with experience.", "replies": [{"id": "ie2iz2i", "text": "You dont need access to costar to see who the power brokers r in the area.", "replies": [{"id": "ie40is4", "text": "This is a good way of finding who the active brokers are in your area. It's easy to say speak to a broker or hire a broker but you need to have some info on who to speak to.  \n\ncostarpowerbrokers.com/winners/", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ie211lo", "text": "Interview a couple brokers and solicit proposals. Also, I've seen many horrible leases drawn up and this is typically where owners without representation stumble. Restaurant leases are often one of the most complicated leases for a variety of reasons.", "replies": [{"id": "ie25q12", "text": "And use a lawyer for the lease, not the broker's template.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ie24bqy", "text": "No just put it on Craigslist or FB marketplace", "replies": [{"id": "ie26osa", "text": "lmao", "replies": [{"id": "ie27fhw", "text": "Let me guess you are a broker or agent", "replies": [{"id": "ie2ntxn", "text": "Let me guess, you are an idiot or a brilliant satirist", "replies": [{"id": "ie2pssb", "text": "Checks out- you are as useless on here as your profession", "replies": [{"id": "ie61u8a", "text": "Gene, I get a ton of my tenants from Craigslist but the OP is as green as they come. Throwing him on Craigslist and expecting him him to write a good lease based on the post he made is as naive as your comments.", "replies": [{"id": "ie6dzty", "text": "Ok, I am admitting defeat. OP, everyone agrees you should give up a large % of your rental income to someone instead of you just finding the tenant just as easily.  And in some markets, the agent/broker can't even be involved in the lease at all.", "replies": [{"id": "ie6g1n3", "text": "Gene,\n\nFor a fellow who can't figure out the more than simple answer to this base level question: [https://www.reddit.com/r/HomeImprovement/comments/rq3tqx/bad\\_tile\\_job/](https://www.reddit.com/r/HomeImprovement/comments/rq3tqx/bad_tile_job/)\n\nYou should *clearly* not be giving advice about leasing or tenant acquisition.", "replies": [{"id": "ie6gimd", "text": "For a fellow who can\u2019t figure out how to cancel Comcast service you shouldn\u2019t be allowed to exist \n\nhttps://www.reddit.com/r/Comcast_Xfinity/comments/gaxasy/cant_get_through_to_comcast_service/?utm_source=share&amp;utm_medium=ios_app&amp;utm_name=iossmf", "replies": [{"id": "ie6kf8k", "text": "Damn dude, you had to work *hard* for that one.  That's like 2 or 3 years ago.\n\nYou'll likely also note in your massive indexing of my posts, I similarly don't offer advice to anyone about things I have no knowledge of....(like dealing with cable companies).", "replies": [{"id": "ie6mczb", "text": "Lol (gets mad when someone reviews posts when they did it one comment before)", "replies": [{"id": "ie6mrhn", "text": "I'm fairly confident no one but you presumes I'm upset.\n\nNow, go back to the children's table Gene.", "replies": [{"id": "ie6nc4e", "text": "You are also unaware how to cancel internet service", "replies": [], "depth": 13}], "depth": 12}], "depth": 11}], "depth": 10}], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}, {"id": "ie6g3re", "text": "&gt;Let me guess, you are an idiot or a brilliant satirist\n\nYou gave him one too many options.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ie25w45", "text": "You\u2019re most likely going to pay a 5-6% commission either way to Tenant\u2019s broker. \n\nWhy not have a broker representing your best interest, as well? \n\nThe answer is always yes (if you have no experience).", "replies": [], "depth": 1}, {"id": "ie288ku", "text": "Use a broker but negotiate their percentage down because you already found the tenant (which is the hard part).", "replies": [{"id": "ie2j8xl", "text": "They said they have a person interested. In no way does that mean they have found a tenant.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ie29fsn", "text": "Even the big institutional players use brokers to lease their space, and they know exactly what they\u2019re doing. \n\n6% is a low price to pay when you could be losing 20% easily due to bad knowledge on effective rent (not the stuff you see online, but inclusive of free rent, TI\u2019s, Etc.) and other market terms", "replies": [{"id": "ie2eiry", "text": "This is what always gets me when I see questions like this.  If Blackstone uses brokers to lease all of their assets, why would an individual landlord think they can do a better job themselves (excepting if they have actual leasing experience)?", "replies": [], "depth": 2}], "depth": 1}, {"id": "ie2frjj", "text": "Coming from a broker, so there is some bias, but a good broker will add value beyond what you pay them. We spend years building relationships with national/regional users and their brokers. We should have a strong grasp of the market, rents, competition, lease negotiations, etc. \n\nBeing in the business for almost 9 years personally I have a good grasp of what users are looking for, what they may pay, how they structure leases, what their \u201cdealbreakers\u201d are, what they typically give on, how much TI they require, etc. all of this goes into being able to analyze the space, who the target users would be and making sure you understand the associated costs and factor that into your rate and terms to create value for you the client.\n\nYou essentially pay your broker for a)their experience, b)their connections and c)the marginal benefit (additional rent/higher sales price) they create by negotiating/achieving better terms.", "replies": [], "depth": 1}, {"id": "ie2i2gs", "text": "Call a commercial RE attorney and have him handle it, that way you pay an hourly rate or flat fee instead of a percentage of total lease value.", "replies": [], "depth": 1}, {"id": "ie2izgc", "text": "If by your own admission, you have never done this before or know the value of your property, then yes, I would definitely understand a broker. \n\nHowever, since apparently you already have an offer, I would pay the broker a commission only on any additional value brought in (even 50% of any additional money would be a win/win). No sense in paying 5% on money which you can already get on your own. If all brokers run away from that proposal, then you likely have a decent offer in hand. \n\nAlso, if you do get a broker, make sure to read the agreement very carefully. The list of potential issues is long, but at a minimum, make sure that the term, tail, and commission are clearly stated.", "replies": [], "depth": 1}, {"id": "ie35hr9", "text": "Speaking from experience and probably a little bias, since I\u2019m a commercial broker. Hiring a good and experienced commercial broker or brokerage team brings quite a bit of added value. When using a broker to bring in a tenant you\u2019re more likely to get the following: better deal, longer term, higher credit tenant, protection and guarantees on your property, less worry and valuable time saved versus doing it yourself. I think it\u2019s a small price to pay knowing you\u2019re taken care of and getting your property cash flowing sooner, which less face it that\u2019s the most important part.", "replies": [], "depth": 1}, {"id": "ie3c2b5", "text": "Absolutely worth it. Brokers also carry insurance for errors and omissions. They know realistically what is will cost and what your take home of that cost is. They are better equipped to manage a deal especially if things go wrong. They also make sure whatever deal ends up in place meets local ordinances and complies with the law.", "replies": [], "depth": 1}, {"id": "ie4182r", "text": "A RE transactional attorney is more important than a broker in this case.", "replies": [], "depth": 1}, {"id": "ie4hazg", "text": "Make a list of questions. Ask each broker for the associates who would also work on your file, odds are they can make a bigger delta in cold calling and follow ups. \n\nhttps://youtu.be/fgdNR1gWM_w", "replies": [], "depth": 1}, {"id": "ie61bq4", "text": "**OMFG.**\n\nHow do I say \"yes\" in 39 different languages?????????????????\n\nAnd it's not just for the lease rate, it's for all that stuff in the lease that you'd think *\"well, that's not really that important...I'll just leave that out*\".....that's reeeeeeeeeeeeeeeaaallllllly important stuff.\n\nIt is *so* important for **you** to hire a professional leasing agent, it can't be stressed highly enough.", "replies": [], "depth": 1}, {"id": "ie6l6bx", "text": "Call a local brokerage and ask for a referral to a broker. Get his input on rents - say thanks. Ask 10% more. Pay a lawyer and not a broker. Get a lawyer to Draft a lease. Ask for personal indemnity but you won\u2019t likely get it. All restaurants covenants are shaky national or not. Don\u2019t invest a lot of cash in the deal if you can lease as is too. Maybe give a couple months net rent free as an inducement. Small deals like this - you will bet less paying a broker who will likely have to release the space in a year - most restaurants fail.", "replies": [], "depth": 1}]