Questions for brokers
Hey everyone,

I've managed a family owned property for the last 8 years but am starting out in brokerage at a very small firm in Seattle and had a few questions. One of my first clients is a dentist looking at a new construction sub-lease and I want to make sure I know my stuff when dealing with the other brokers.

1. TI's: It's my understanding that unless it's an 'as-is basis' or a 12-18 month lease, TI's are always given. Is this the case? What's a reasonable $/SF rate? I've heard in retail it's roughly 50% of the asking rent (Rent is $30/sf and TI's are $15/sf). Currently working dental client so I know a build out cost is much higher but wasn't sure if that always impacts the TI's given.

2. How much free rent is too much to ask for? We typically give 3 months as that's usually how long a build out is. Is 4-6 months asking too much or is that dependent on the other factors (TI, Asking rent)

3. How frank can you be with other brokers? Can you flat out ask them what kind of TI's they're giving if they don't state it.

I think that's it for now, your responses are much appreciated!
[{"id": "daprcyd", "text": "Sorry to be blunt and simplistic, but I really don't know any other way to put it. EVERYTHING is negotiable. On longer term leases some things are more negotiable than not. You can always negotiate down a price then ask for a lot of free rent and then renegotiate the price back up in order to achieve more free rent. There are really thousands of ways to do a particular deal and they will usually all be different. ", "replies": [], "depth": 1}, {"id": "dapxg8l", "text": "As always, the answer is: it depends.\n\nFor everything you've said, it depends.\n\nThat being said, in my area sub-leases usually don't have construction because you have to get approval from the landlord and the original tenant for everything. Unless the sublease is for a normal lease period (3yrs+) construction may not be worth it. Just from my experience.\n\n1) In my area, a dentist would get a bunch of TI because they would likely sign a 10 year lease. Build out costs depend on the local market and your client's needs as well as the landlord's goals. Are they planning to keep the property? Are they planning to sell it? An owner planning to sell will gladly dump money into the property because for every $1 they put into it, they may see a 10x return upon sale. (This is not an exaggeration.)\n\n2) 4-6 may be too much, but it depends on your local market conditions. We're lucky to squeeze out 3 here on a 5 year deal nowadays but I've heard of as much as 6 when the market was different.\n\n3) More honesty is better. Brokers don't have time for BS, we get enough from clients and more are pretty chill. Just say \"What can we expect in TI for a (X # of years) deal?\" and that should get the ball rolling.\n\nIf you're in Georgia, would love to help you work this out. Otherwise, please find someone more experienced for guidance. You are dealing with someone's business and livelihood. It's a great honor to be trusted, but there's also a chance that you may do some damage or not get them all that they can get like ROFR and renewal options.", "replies": [], "depth": 1}, {"id": "daqhslg", "text": "All those questions are variable, with large relevance on whose side of the table has the most leverage in the transaction.\n\nQuite a bit of information can be found by cold calling similar site locations and asking rental rates and TI offering for comps.\n\nMarket comps vary by market so there isn't a clear answer anyone can give you.\n\nAs far as being frank with other brokers, yes. You can flat out just ask, but be prepared for them to dodge and not give you a direct answer. Best case is start high in your LOI and find out that way when they counter. But manage your client expectations that your initial offer letter is just the start to the negotiations. Throw in a lot of deal points that you feel freely willing to give up later as bargaining chips.\n\nEdit:\n\nAlso, don't use a free rent clause for a build-out period. Insert a clause for rent commencement that gives your client time to construct.\n\n\"Rent will commence on the earlier of 120 days from delivery of premises or on the day the tenant opens for business.\"\n\nThen you can negotiate a few months of free rent once rent commences. You will either get one or both of these clauses, but it still accomplishes the same thing. But be aware, Landlords carve free rent out of the TI budget and vice versa.\n", "replies": [], "depth": 1}]