Are we thinking through this single tenant commercial lease the right way?
We are Landlords new to commercial, and recently acquired a 2,800 sq ft retail store front building on 0.3 acres on a major street in a major city in Texas built in 1975. Our goal with this property is to be essentially hands off with a NNN lease. We will administer the property taxes (so we are not delinquent) and the insurance (so our interests are properly guarded), and the tenant will reimburse us for those.

As for property maintenance and repairs, since it is a single tenant property, we would like prospective tenant to both administer and pay for any repairs and maintenance ('in a workman like manner'). We will be responsible for the main items - foundation, roof, structure, major plumbing, major electrical and parking lot re-paving. Leaving all the maintenance and repairs to the tenant and not charging any CAM or management fees, I understand we may not be able to bill the tenant back for any improvement work we want to do, but are there any major items we may be on the hook for in this lease structure? For instance, I know if a crack develops in the driveway, I may be on the hook for repairing that. Similarly if the parking lot needs to be re-striped, the lease doesn't say anything about that and I may be on the hook for that too. Is it normal for the landlord to take care of those in a single tenant property? Ideally I would have the tenant take care of those but I can't seem to find that as a norm or matching words for the lease.

Another question - for now we are planning to lease at the market rate of $2 / sq ft / month, where the comps mostly come from strip malls. In our case, the tenant will have exclusive access to the full 0.3 acres. Should that exclusive use make rent a bit higher, or are single tenant properties less desirable and I should be happy if I just get the asking price based on building space?

Thanks y'all for your insight and advice. I would especially like to hear from you if you are a landlord on a single tenant property or have experience with something like this. Also any suggestions on what other reddit communities can be of help is appreciated.
[{"id": "iwd1jce", "text": "We are the owner too, btw ... just in case there is any confusion.", "replies": [], "depth": 1}, {"id": "iwd2vz6", "text": "Try to have them be responsible for parking lot maintenance too. Otherwise seems ok. I see this structure a lot for single tenant props.", "replies": [{"id": "iwd3dgv", "text": "Should I be explicit and say re-surface/black top and re-stripe every 3 years?  What do you think about that?\n\nP.S. Appreciate the comment/engagement", "replies": [{"id": "iwd3pgu", "text": "I\u2019ve never seen a specific time frame but yes be specific about your expectations. It\u2019s all negotiable so see how hard you can push but don\u2019t lose the deal over it. \n\nAt the end of the day the Tenant is the one who will suffer most if their parking lot is in shambles.", "replies": [{"id": "iwd4r9b", "text": "Good point.  Google said 3 years, but I'll put in 4 years and be flexible depending on the tenant.", "replies": [{"id": "iwdlbmy", "text": "You should ask your broker or attorney what is typical in their experience for your specific market and use.", "replies": [], "depth": 5}, {"id": "ixm4bz6", "text": "I\u2019m not sure this was down voted. \n\nPut that in there. If the tenant agrees, great.", "replies": [], "depth": 5}], "depth": 4}, {"id": "iwe24fn", "text": "Ummm. Their customers suffer, it\u2019s a safety issue. Not maintaining to town code is u safe and a lease violation for the tenant.", "replies": [{"id": "iwe2njx", "text": "Exactly. Customer suffers = Tenant suffers.", "replies": [{"id": "iwe5eab", "text": "Nay nay\u2026 triple net Does not excuse the building or parking lot for being out of code. That is the landlords responsibility. So if the parking lot sucks and somebody gets hurt the court will want to know why you didn\u2019t take care of the parking lot or make sure that your tenant did, and they will want to see documentation. \n\nThe customer suffers. \n\nThe customer sues tenant, realizes you have more money and the building insurance.  \n\nWhen you all go to court the judge will then ask who is responsible for maintaining the parking lot. You will see the tenant was via the triple net portion of their lease and the court will say did you enforce the lease? Because as property owner you\u2019re responsible.\n\n13 years property manager in commercial", "replies": [{"id": "iwhv0cs", "text": "I\u2019m saying they should try to negotiate that tenant is responsible for CAM meaning tenant would need to deal with parking lot issues.", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "iwe1yjg", "text": "Not every 3 years, \u201cto code\u201d, whatever the safety code is for parking lot maintenance in the town.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iwd435f", "text": "Make sure TT is maintaining HVAC, require PM contract and proof of contract as well as repairs", "replies": [{"id": "iwd4iwq", "text": "Thank you for this note, u/phjenny.  I was advised of this by my lawyer too.  I will make sure to do this, and it just seems like the right thing to do to get the most life out of the A/C.  Ideally I'd have the TT take full responsibility of the HVAC, but it is far from new ... so atleast a maintenance plan will do :)", "replies": [], "depth": 2}, {"id": "iwe0u22", "text": "And no if they don\u2019t take care of the things in the lease like the HVAC, you will have to take care of it and bill them back for it. Otherwise your asset will take a hit and the mechanical systems won\u2019t live to their lifespan if not maintained so you\u2019ll be shelling out capital expenditure dollars way sooner\n\nI would definitely charge them a 4% property management fee even if their triple net. Somebody has to deposit the checks, do the accounting, handle those X repairs, and manage but they are actually holding up their end of the triple nets, True up the Cam fees, shop for insurance, collect their certificate of insurance have the roof structure and basement foundation checked according to schedule, open the mail, Issue lease violations, pursue eviction if needed, reinspect and waive lease violations once they are corrected, track late fees etc.\n\nAre you in a region with snow? Who is doing the plowing in the nice weather who does the landscaping and who\u2019s responsible for paying for it?\n\nI would certainly specify that the company leasing your space has to resurface and stripe the lot if they don\u2019t then you do it and you charge them for it. Because they have to provide the required handicap parking for their business. And the safety alliance to protect everyone if they are the only tenant on site and they are paying to rent the entire property, Actually nobody is going to that parking lot unless they\u2019re doing business with your tenant correct?", "replies": [{"id": "iwe13bl", "text": "Commercial real estate is not passive income unless your an investor with no management say or responsibilities.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iwd5kir", "text": "u/2percentgay and u/phjenny \\- any advice on how to vet a tenant who is capable of handling property repair and maintenance along with running their business.  It'd be nightmare if the tenant is incompetent when it comes to that ... and I'll feel like an idiot for not having put a property management company up front in the lease.  Does that make sense?...", "replies": [{"id": "iwd66g8", "text": "Part of being a commercial landlord is teaching tenant about their lease. You should be working with a broker and your attorney to ensure you\u2019re covered and your broker is brining you the best tenants for your space.", "replies": [], "depth": 2}, {"id": "iwe2civ", "text": "I think that there\u2019s no way to vet you can Google them, once in a while a former landlord will pursue a tenant for the triple nets but they say they didn\u2019t take care of. But it\u2019s not everyone in the paper.\n\nIt\u2019s your asset to protect, property management like any management is largely babysitting. You have to visit the site two or three times a year and check the mechanical systems to make sure that they have tags that say they were serviced in the last year and ask for any reporting provided at that annual inspection. If there is a tag out of date issue a lease violation warning and tell them they have 30 days to take care of it. Visit again in 30 days if it\u2019s expired still, you give them a lease violation and arrange to take care of maintenancing And bill the tenant back for the professional services plus a 4% property management fee . Late rent is also a lease violation. Failing to maintain the parking lot as a lease violation. Three lease violations well documented protect you if you have to bring someone to court. That\u2019s how property management works you do some thing and you document it and you tie it back to the lease\n\nAnd if you mean anyway to see if your tenant is handy and is going to be the one personally handling those systems they are responsible for, that\u2019s a big no. Add \u201call work must be completed by a licensed and insured contractor, Who must provide a certificate of insurance that lists Landlord as additionally insured for any work is done on any part of the building. \u201c It\u2019s your asset to protect.", "replies": [], "depth": 2}, {"id": "iwe2jrj", "text": "I do not know what that statement means. Can you say it another way you wish that you added property management fees to your lease?", "replies": [{"id": "iwe3occ", "text": "I am trying to make the lease more tenant friendly by reducing the overhead bc this is not a multi-tenant property. But your points above are valid and I need to at least collect 4% for the management of the asset\u2026", "replies": [{"id": "iwe5vdz", "text": "4% of gross rent is the standard for property management expense in a commercial real estate portfolio. And then you can be reimbursed for that in CAMs. Don\u2019t discount yourself upfront. See how it goes,  if they pay rent on time every month for six months to a year, see if they really maintain your asset. Then discount them at their renewal. Or send an amendment halfway through their first term saying you\u2019ve been such a great tenant we\u2019re going to chip in this way or that way to reduce their rent. But you\u2019re discounting it for tenants who will then never feel the pain of that responsibility versus will want you to discount them more later again in the negotiation process\n\nProperty management fee of 4% as above can be collected in the cam true up, but asset management fees are also 4% but I do not believe they can be collected under cams. Asset management fees would cover somebody who handled a refinance, handled a balloon payment, handled reserves out of cash flow in an interest compounding account, who would decide how to a abate a tax bill. And generally anybody that\u2019s over the paygrade of a property manager cannot be included in the reimbursements", "replies": [{"id": "iwe5x3v", "text": "I\u2019m available for consulting if you need help. Just send me a private message and we can figure something out", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "iweu94p", "text": "Your line of reasoning for wanting to be hands off and pass off maintenance onto the tenant is not great. If you want to be hands off, hire a property manager. There is no incentive for a renter to do anything more than the bare minimum to keep a place running, and that bare minimum can get skipped if the tenant is near the end of the lease or entering bankruptcy. Similar to how people treat rental cars.\n\nTypically class A/B retail centers will have good property management to ensure the property is maintained to a high standard, while C/D centers will take your approach to letting tenants decide on the low level of maintenance.\n\nTo vet tenants you would want to know their profitability through years of tax returns and proof of liquidity in bank statements to cover multiple months of rent. \n\nIt sounds like you have a bad broker. the property management and parking lot maintenance should be standard in a NNN lease.\n\nIt also sounds like you don't have a good grasp on billing operating expense estimates and doing true ups at year end for those expenses, which will save you money with a good property management company.", "replies": [], "depth": 2}], "depth": 1}, {"id": "iwdqd7a", "text": "I would think the exclusive use would make the rent higher. But as always it\u2019s hyper market specific. I would ask a leasing broker who covers that area what they think about tenant demand at the higher asking rent.", "replies": [], "depth": 1}, {"id": "iwfir2x", "text": "Depending on the location and the condition of the plaza, $24 psf might be too high or too low.", "replies": [{"id": "iwfisag", "text": "Based on the size, I suspect it\u2019s too high.", "replies": [], "depth": 2}], "depth": 1}]