Tenant rep unwilling to negotiate certain terms...red flag or normal?
Hey guys, me again! I recently asked a question about Usage Hour requirements in a lease and got lots of great feedback. I now have another question after talking over the lease draft with my tenant rep. 

It does seem to be a fairly typical NNN lease, and I do understand this means the tenant is responsible for everything but the building shell/roof. However, I have seen lots of people who are able to negotiate a cap on CAM increases (at least the optional expenses), or a cap on how much they will pay for repairs/replacement. I brought this up to my tenant rep and she pretty much said "That's how these leases are, you just have to accept the risk". She also did not entertain the idea of working in some sort of break clause for me as a tenant, or force majeur for the same reasons. 

I understand every market is different, and every landlord is different as well. As it is, the landlord has agreed to 90 days free rent (not included in the 3 year lease term though - the 3 years starts after the free rent), and a $5k contribution to tenant improvements (quoted between $20-$25k). We are also asking to have the usage hour requirements removed. But should I be pushing for a cap on my spending responsibility? The space has been empty for 2.5 years and the building is 20 years old. Landlord has agreed to give the space in "as is" condition, with the hvac, plumbing and electric functional. 

I'm honestly just nervous about being responsible for paying literally anything they want me to for the next 3 years. But I also don't know a ton about this industry, and don't want to think I can get more than what's typical.
[{"id": "iccm9fy", "text": "Is it a free standing building? Are you occupying the whole thing? Is the owner a large company or a more localized landlord? I only ask because if you\u2019re taking the full building and the owner isn\u2019t say a Prologis or something else I would argue for you to self perform the cam up to you know building standards. I would also negotiate that any repairs or improvements that are made or have to be made due to being included in cam charges if you have to pay them are amortized across their Expected useful life and you be charged accordingly.", "replies": [{"id": "icd09wz", "text": "Thank you for your reply! It is not a freestanding building, it's a small strip with 5 businesses total. The landlord is listed as a company, and has a c/o that's a big real estate company near me.", "replies": [], "depth": 2}], "depth": 1}, {"id": "iccp72g", "text": "You need an attorney who is experienced in commercial leases.  The attorney should make edits to the lease terms based on your requests.  The agent should lobby the Landlord to have these lease items approved.", "replies": [{"id": "icd0mx7", "text": "Thank you! I do have an attorney waiting to review the lease, but I was a little unsure whether to give them this first draft, or if I should have the tenant rep send back comments, and have the attorney review the final document before signing. They said people do both, it just depends on how comfortable to broker is with asking for changes...", "replies": [{"id": "icd8nis", "text": "This will likely piss off the landlord and their attorney.  Your attorney should absolutely review and mark up the first draft.  It's a bad look to send lease comments, and then after the landlord responds to those comments, for you to send back a whole bunch of other comments that you didn't bring up in the first place.  Please also make sure to use an attorney that has substantial experience with retail leases, or you will be doing yourself a disservice. I've encountered so many attorneys representing tenants that focus on the most mundane issues while leaving more material concepts untouched.", "replies": [{"id": "ice7rdw", "text": "Thank you. I'm setting up a meeting with my attorney before sending over any comments.", "replies": [{"id": "iceakmj", "text": "No problem. In my experience, brokers are good for helping tenants with finding space and negotiating big picture deal terms like rent and improvement allowances, but they will not be much help when it comes to actually negotiating the lease since it's in their best interest for you to sign whatever the landlord hands you as quickly as possible.  An experienced leasing attorney should have a good sense of the market and since you're dealing with a semi-large real estate company, there's a chance your attorney has previously negotiated leases on their form.", "replies": [{"id": "iceeiod", "text": "This seems to be the case. I actually already had the space chosen when I reached out to her, so I really just needed some help with the LOI and lease negotiations, and I do feel a little bit of a push to just sign the lease as is because then she will get paid. I'm hoping getting a second opinion from an attorney will make me feel more confident about the decision, regardless of which way I go. I don't want to question my broker's expertise, but I do wish there was a bit better communication/explanation of things.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "icd8esu", "text": "How many other spaces have you looked at? What's your best alternative to this space?", "replies": [{"id": "icd8sjp", "text": "Only one, which is $7/sq ft more expensive and roughly the same size/needs the same amount of work. Every other space in my area available now is too big, or $30/sq ft where this one is $23. \n\nThere is one flex space available that I also considered but it's bigger than I'd like, farther from my home, and would need a lot of work.\n\nEdit: The alternative would be not getting a space right now and waiting. I have a successful business, this would be an expansion/plan to eventually step away from the labor side of the business and begin managing.", "replies": [{"id": "icda7zm", "text": "Doesn't that $7/sf difference make up at least partially for the CAM expense risk? You could offer slightly increased base rent in exchange for a cap. It doesn't sound like your negotiating position is particularly strong though.", "replies": [{"id": "icdk5l8", "text": "Well, I should have mentioned the other place has cams as we, and they're higher than this location. It would end up being about $1k more per month total for 290 sq ft more.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "icdbjfm", "text": "You should be able to negotiate a cap. It's not a big deal too small to break a deal. I say push for it. DO NOT BE AFRAID TO WALK AWAY FROM THE DEAL. OTHERWISE, YOU WILL GET THE SHIT END OF THE STICK.", "replies": [], "depth": 1}, {"id": "icdpyio", "text": "Is your tenant's agent a commercial realtor or is she mainly a residential realtor who doesn't know that much about commercial, and is reluctant to make waves in a deal she doesn't really understand?\n\nThe only time the tenant has any leverage is **BEFORE** the lease is signed, so whatever your concerns, requests , tenant improvements, parking/loading etc. are, NOW is the time to bring them up.\n\nIt's real estate, it's all negotiable, and yes you are right to be concerned that you could be stuck with the bill for things that go wrong after you move in. \n\nMost common beefs, especially among smaller tenants in a strip mall situation are inadequate unassigned parking /loading that is monopolized by one of the other tenants, malfunction of A/C (so make sure that you see maintenance records on the A/C and find out how old is is and how regularly it has been serviced and have your own inspector look it over), mystery leaks that never really get fixed--those funny brown marks on the ceiling usually mean something wet that is still wet, and ghost charges on the CAM. \n\nIn my experience if the landlord is going to cheat it will be by padding the CAM with charges for services that are never actually delivered or only minimally delivered including landscaping, security, marketing and admin fees. \n\nUnlike the base rent, which is fixed, the CAM floats and is retroactive (that is you can be billed for any increases in the cost after the fact). You want to make sure that there is language in your lease that allows you to view the actual CAM charges and see how your pro rata share is computed. Typically that clause says the tenant may view the records at the office of the property manager or landlord at a mutually convenient time. You may never need to use it but you want to be sure it's there.\n\nAlso you want to be sure that there is a way to exit early without drastic penalty - should be language allowing you to sublease with prior written consent which shall not be unreasonably withheld, or to find a tenant to fill out the unexpired term of your lease should you for any reason not be able to fulfill your obligations.", "replies": [{"id": "ice9l1p", "text": "Thank you! She does both - she was actually the only one I could find who would take me on as a client, maybe because it's a small space (1000 sq ft) and its my first commercial lease? \n\nParking doesn't seem to be an issue, there's a good amount of spaces and none are reserved. The AC is a huge concern because I don't want to be stuck paying for a brand new $10k unit when it's possibly I'm only there for 3 years. No leaks that I could see, but you never know. \n\nThere is language for subletting upon approval.", "replies": [], "depth": 2}], "depth": 1}, {"id": "icdz1ay", "text": "Every landlord is different. With some I have been able to negotiate a CAP on the NNN/CAM expenses per year. Some others have said no. When they said no, I dug deeper (how long have they owned the property? do they plan on selling in the next 5 years?) Knowing these answers allows you to make a more informed decision.\n\nMost of my landlords will not allow a break clause. If you don't feel strongly about your business, don't lease the space. \n\nNot all NNN have the landlord responsible for the roof/building, so you need to VERIFY exactly who is responsible for what.\n\nSometimes space is vacant because the Landlord or their rep is difficult to deal with.", "replies": [{"id": "ice8y2u", "text": "Thank you for your reply. It seems everybody I talk to tells me more things I should be requiring from the landlord - maintenance and repair history of AC, previous years CAM costs, etc - and my broker/rep isn't mentioning any of this. I'm definitely going to have an attorney go over the lease with me because I don't know if she's really all that interested in helping me out. \n\nThe break clause I understand, I guess I'm mostly concerned about something like Covid.", "replies": [], "depth": 2}], "depth": 1}, {"id": "icdz6va", "text": "A 20-year old building is going to start having a lot of Cap-Ex outflows.   I would definitely try to negotiate a cap on Cap-Ex contributions as the exposure can be a significant (typically you wouldn\u2019t be pay the amortization of the capital items, but should have a cap PSF).  As for typical operating expenses I wouldn\u2019t expect them to concede on the year 1 expenses but you should be able to negotiate a growth CAP on controllable CAM items (typically everything except snow removal, utilities, insurance, and sometimes security).  They should also be willing to send you a budget detail so you know what to expect.", "replies": [], "depth": 1}, {"id": "icgck1s", "text": "Make sure Capex items are amortized over their useful life. Otherwise if a new roof gets put on in the last year of your lease you are stuck paying for it while you get very little use out of it.", "replies": [], "depth": 1}, {"id": "ici4s2b", "text": "You have a ton of good advice in this thread. The best advice in here is to lean on an attorney and let them guide you to what is actually the best the LL will do. Just my two cents as a landlord broker, for this type of deal we would never cap CAM. I am in a tighter market so it may not apply. Wishing you all the success in the world though!", "replies": [], "depth": 1}]