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[{"id": "hvtn7dr", "text": "Alot of it is market specific. Network with some brokers and other tenants of similar properties in the area. Gotta find out where and how deals are being done/structured.", "replies": [{"id": "hvto3zm", "text": "I talked to a few brokers (mostly cold calling on Loopnet) and a few that are on my phone and try to pick their brains. They all said to try to get as much as you can. Try to lower. Having said that the current market rate for a new lease is significantly higher. During covid we never missed a payment and we try to have an open line with the landlord. Our goal is to grow and  focus on the business and not have the stress every 5 years going back and negotiating the lease.", "replies": [{"id": "hvtyxwk", "text": "Just use a broker. Tenant reps get paid by the landlord so it notionally doesn't cost you anything. \n\nThe fact you're posting on Reddit for a litmus test on your proposed lease terms is not a sign of competence. That's not a slight. I assume commercial real estate lease negotiation isn't your core business, but it is for the broker you should be hiring.", "replies": [{"id": "hvu18p0", "text": "True. Not my core business. \n\nWe have a broker and a lawyer who works with us on other ongoing projects. But they are just giving advice and saying we don't need to step in and that I work directly with the landlord.", "replies": [{"id": "hvu1nks", "text": "Seems like an odd choice for a broker to not lend their expertise on a lease transaction but fair enough, you sought help so my objection is withdrawn.", "replies": [{"id": "hvvint7", "text": "Commissions on Renewals for Retail centers are atypical.", "replies": [{"id": "hvvnzv3", "text": "Depends on the market and landlord in my experience but I'll concede they're not guaranteed in a tighter market.", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hvtndnm", "text": "Unless the owner is completely ignorant, or the area is really bad, I doubt they would accept the rent to be raised below inflation.", "replies": [{"id": "hvtohgk", "text": "This, depends where you are, my market we are currently raising our rates 3-5% each year", "replies": [{"id": "hvtorxx", "text": "Dallas Fort area", "replies": [{"id": "hvu5x38", "text": "This is ridiculous, they will lose respect for you and tell you to fuck off\n\nIf you want to go ahead you can ask for more options to renew on signing, and then ore excersise them. Landlord would be dumb", "replies": [{"id": "hvubggy", "text": "You don't know their situation.", "replies": [{"id": "hvvjm68", "text": "As The Ultimate Salesman, you would know that wasn't part of the question....so...comments need to respond to the data that *is* known.\n\nAnd the Landlord would indeed be dumb....in the DFW area....to accept that deal.\n\nEven in a Class C structure.", "replies": [{"id": "hvvwvn4", "text": "This subreddit is so pretentious.", "replies": [], "depth": 7}], "depth": 6}, {"id": "hvw6ak0", "text": "This too.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}, {"id": "hvumwy9", "text": "DFW commercial landlord here. We are working on raising our rents to market across our portfolio, but rents are rising FAST in the metroplex. If your landlord has half a brain and pays any attention to the current market then they won\u2019t even consider this offer. That said, if a good tenant came to me with this offer I would appreciate that they want to stay long term and would probably offer a slightly lower rate than market, but still wouldn\u2019t offer anywhere close to what you\u2019re asking.", "replies": [{"id": "hvw68gc", "text": "This.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "hvtoy8l", "text": "Yes, that makes sense, but 5% every 5 years is very low.", "replies": [{"id": "hvvgvnt", "text": "Unless your CVS", "replies": [{"id": "hvvncne", "text": "Yes \ud83d\ude02\ud83d\ude02\ud83d\ude02", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "hvw600v", "text": "STL.  3-5% annual bumps are normal.", "replies": [], "depth": 3}], "depth": 2}, {"id": "hvw65h2", "text": "Rental rates are not tied to inflation. They\u2019re reflective of the local market. Some markets can command annual rate increases like that. Some can\u2019t.", "replies": [{"id": "hvw9uyf", "text": "Normally when you negotiate a contract, you want to at least to meet inflation, unless the market is Gary, IN.", "replies": [{"id": "hvwfmtx", "text": "Gary, IN, haha.  I just tell my people to never conflate rental rates and inflation. \u201cInflation\u201d means an increase in an index that\u2019s comprised of a market basket of goods that does not include commercial real estate.  Rental rates can appreciate, but there\u2019s no inflation.", "replies": [{"id": "hvwg2q2", "text": "Commercial real estate is an investment. Few people are willing to invest in something that will not hold value against inflation. Market rates rarely state under inflation, unless that market has serious issues.", "replies": [{"id": "hvwihgu", "text": "I think I\u2019m using \u201cinflation\u201d in the strict sense, and you\u2019re using the term loosely.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hvtueat", "text": "I\u2019m surprised why companies would lease for that long. It would actually be more effective to purchase it and sell it after 25 years", "replies": [{"id": "hvtx1fo", "text": "Limited capital and/or availability of desirable locations. Why don't grocery stores own all of their real estate? Etc etc.", "replies": [], "depth": 2}, {"id": "hvud8hh", "text": "Sources of funding is the biggest issue. Ground leases are typically 20+ years.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hvtx3dq", "text": "Just do 2% annual or CPI % capped at 5%. Pretty reasonable and helps adjust for inflation", "replies": [{"id": "hvud5ve", "text": "2% annual is a lot more than 5% every five, OP isn\u2019t trying to crush their expenses.", "replies": [{"id": "hvui419", "text": "2% annual is normal lol", "replies": [{"id": "hvukh3t", "text": "Very normal", "replies": [], "depth": 4}, {"id": "hvurlxp", "text": "It\u2019s arbitrary to argue what is \u201cnormal\u201d. We don\u2019t know what market is. OP is clearing offering up a lot of term, some landlords will do a deal to get that.", "replies": [], "depth": 4}], "depth": 3}, {"id": "hvukfes", "text": "Meant CPI annually as well", "replies": [], "depth": 3}, {"id": "hvvjzjn", "text": "Considering that CPI is an annual adjustment (and calc)....\"*... 2% annual or CPI % capped at 5%.*\" ....would be presumed to be an annual adjustment..", "replies": [{"id": "hvw0ln9", "text": "That doesn\u2019t read right. It would then become landlords discretion, obviously they would choose the higher. That being said, CPI needs an index to be benched off and typically CPI is involved in Government/medical leading. It\u2019s not largely involved for industrial or strip mall retail.", "replies": [{"id": "hvxowzq", "text": "It reads, fairly clearly, that the 2% and the CPI are intended to be annual adjustments.  It is always the landlords discretion (it's the landlords lease).\n\nI've used a fixed floor and CPI on my retail, industrial and office assets since 1988.", "replies": [{"id": "hvxuf09", "text": "Lease is between two parties, it\u2019s not landlords lease. That\u2019s hogs-wash. There is a reason leases get negotiated to begin with. I disagree, however it could have been something of the past. Definitely isn\u2019t used these days on new leasing. Each to their own.", "replies": [{"id": "hvxzcp6", "text": "Last time I checked, that is correct, a lease is between two parties (without a second party, it's not a lease.  It's a document), however, unless the Landlord is a complete lay down...the Landlord writes the lease, ergo, controls it.\n\nThey are the landlords terms.  To be negotiated by both, hopefully favorable to both parties.", "replies": [{"id": "hvy43to", "text": "Are you really trying to explain this to me? Sky is also blue.\n\nSpeaking to the original (actual) question which has now been deleted. Normally, it\u2019s the greater of 2/3 percent (a fixed amount) or fair market/CPI adjustment ( if CPI it will typically have a cap). \n\nThis subreddit needs to have moderators verify people, so much BS is constantly spread around.", "replies": [{"id": "hvy5k1d", "text": "&gt;Are you really trying to explain this to me?\n\nNo.  I think it's fairly evident that would be unproductive.", "replies": [{"id": "hvy7fop", "text": "Just ignore the actual body of the response and result to nit picking. Classic under qualified reddit response. You\u2019re a fool.", "replies": [{"id": "hvy85ep", "text": "And once again, butt hurt, you down vote. Three in a row.\n\nPerhaps in the future, instead of insisting on divulging information that isn't true elsewhere as if it were, you might opt to listen and learn.\n\nUnlikely, but, there's always hope.", "replies": [{"id": "hvybxmz", "text": "I am not fazed by up or downvotes. Looking over your post history, you clearly are not well versed and just another reddit larper.", "replies": [{"id": "hvydsbl", "text": "And yet, you made it 4 in a row.\n\nFascinating.\n\n*Edit:  I stand corrected: 5.*", "replies": [], "depth": 13}], "depth": 12}], "depth": 11}], "depth": 10}], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hvude59", "text": "The best answer is get a real estate attorney who operates in your market to help structure the deal, both legal terms and the economics.", "replies": [], "depth": 1}, {"id": "hvup94s", "text": "You can do whatever you want that does not mean the other side will agree to it. They will likely want at least 3% or cpi bumps. A new tenant often means higher market rent so you may not get much traction", "replies": [], "depth": 1}, {"id": "hvv84f0", "text": "I\u2019ve been trying to think of any situation where I would agree to those terms.   Unless your rent is currently way over market (unlikely on a 5 year old lease) I can\u2019t think of any reason to agree to this.   Regardless of the opportunity risks of committing to that length of term, anything less than 1.5%-2.0% compounded annually (which is at least  8% every 5) will fall behind inflation in a \u201cnormal\u201d period.   Given the unknowns around inflation currently, I would need a lot more upside (think at least 15%-20% every 5 years) to commit to that term, and that\u2019s assuming strong credit history (term without credit is not term).", "replies": [], "depth": 1}]