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Commerical Space - Lease Question

I’m wondering if anyone can help me with commercial building leasing.

In all the ads I’m reading, it says $10-20/square foot, but I don’t know if it’s per month or per year.

If anyone experienced in leasing building space could help me with this, I would appreciate it very much :slight_smile:

It is absolutely per month.

The next thing you need to find out is if that is fully assessed.

Often times builders of commercial property get tax breaks (partial assessment) on new structures. When the full tax comes due, you could get hammered.

Other things to find out are what utilities, if any, are included.

Lastly, know going into this that just a basic commercial phone system can cost several thousand dollars just for equipment and that the overall expense can be a significant component of your monthly operating expense. Internet connectivity can get costly as well.

I could go on and on, but these are some of the basics when assessing a first time commercial lease.

[quote]apwsearch wrote:
The next thing you need to find out is if that is fully assessed.

Often times builders of commercial property get tax breaks (partial assessment) on new structures. When the full tax comes due, you could get hammered.

Other things to find out are what utilities, if any, are included.
[/quote]

typically the fee owner/lessor is responsible for the property taxes, not the lessee. it goes without saying to review the terms of the lease very carefully, ideally by your attorney as well.

Is this for the business you’re thinking of buying? Because I don’t mean to bag on you, but if you don’t know the answer to a basic question such as this, you need to be extremely careful about buying a business. In fact, you might want to stay away from it all together until you have a better understanding of business basics.

People can cook the books in all sorts of ways.

My stepfather bought a business he thought was profitable and proceeded to lose half his life savings in a matter of months…

[quote]apwsearch wrote:
It is absolutely per month.
[/quote]

Maybe if you live in Cali…
I would say it is per year. Let’s say you wanted a 5K square foot center, at 10 per month, that comes out to 50,000 per month!

I don’t know about you, but there’s no way I’m paying 50K per month for a 5K square foot center.

Usually the 10 to 20 is per year.

EQ

Sounds like a per/year lease to me. I’ve looked at space before and a monthly lease was usually something like $2-3/per ft. Of course this can depend on location.

FutureDave - This actually is for something else. I know I started a thread about buying a gym, but this is completely different. Its something I came up with right after the gym idea. LOL! But thanks for the help and opinions :slight_smile:

[quote]Equilibrium wrote:
apwsearch wrote:
It is absolutely per month.

Maybe if you live in Cali…
I would say it is per year. Let’s say you wanted a 5K square foot center, at 10 per month, that comes out to 50,000 per month!

I don’t know about you, but there’s no way I’m paying 50K per month for a 5K square foot center.

Usually the 10 to 20 is per year.

EQ[/quote]

That is what I was thinking, but wasn’t sure (which is why I started the thread LOL!) There is a nail salon that is right next to a place I was looking at. The space looks to be the same square footage and they want $20/square foot and its 1300 square feet.

So, if it was per month, that would be $26k per month just to pay the lease. That nail salon has been there for a couple years, so I’m assuming they are doing okay.

Again, I’m not sure. Just curious if its standard around the country or not.

Thanks for all the replies. I appreciate it :slight_smile:

ya its definitely per year. i am in the process of negotiating a lease right now and as a word of advice, for sure get a lawyer and hire a commercial broker/agent to help you with the negotiating. all leases come so one sided for the landlord its insane. good luck!

[quote]toughcasey wrote:
ya its definitely per year. i am in the process of negotiating a lease right now and as a word of advice, for sure get a lawyer and hire a commercial broker/agent to help you with the negotiating. all leases come so one sided for the landlord its insane. good luck![/quote]

Thanks for the tip. I do know someone (my future business partner’s mentor) that has bought a couple businesses and runs them. I’ll be sure to have him along.

[quote]Frank Castle wrote:
apwsearch wrote:
The next thing you need to find out is if that is fully assessed.

Often times builders of commercial property get tax breaks (partial assessment) on new structures. When the full tax comes due, you could get hammered.

Other things to find out are what utilities, if any, are included.

typically the fee owner/lessor is responsible for the property taxes, not the lessee. it goes without saying to review the terms of the lease very carefully, ideally by your attorney as well. [/quote]

No shit, sherlock. However, property taxes are a component of the lease and in this case when full assessment hits your lease WILL go up, often times significantly. That is why it is important to ask this question and understand the contract.