Commercial Real Estate Leases

– Not so simple

Here is a great real life example of how a tenant can put themselves into a not so favorable position.  Recently, we had a call from a tenant who seemed to take on too much warehouse space in the Austin area.  Their game plan was to stop bleeding money so they contacted us about subleasing. Before we got involved, we asked them a very simple question. “Did you read the sublease provision in your commercial real estate lease?” The answer was “Well I have glazed over it”.

Moving thru the leases details

As a responsible broker, we asked them to send us a copy of their master lease so we could review the language. Case in point , within the commercial real estate lease there was language saying that their landlord can charge them up to in excess of $3000.00 if they chose to sublease their space. This fee was to cover the landlord’s costs supposedly of checking the sub lessee’s credit.  Ok, folks .. here is why it is important to utilize a commercial real estate broker versus doing it yourself. Typically, some people say to themselves “I can just look up properties on the web and cut my own deal”.  The question is : Is it really reasonable to ask a tenant to pay a landlord $3000 to check a sub lessee’s credit?  What do you think?

 

If we represented this tenant, we would have asked to strike this language. Why? it is a pure profit ploy and does not benefit the tenant whatsoever. Small things like this can cost a business $1000’s of dollars.  A professional tenant representation broker knows from experience what to look for.  We also know when to tell you to seek the advice of an attorney for complex legal language.  Now this tenant is stuck. Can you get stuck doing the same thing? Of course, if it has been done once it can be done again and again.  A standard commercial real estate lease can be anywhere from 15-39 pages long , how would a business that does not transact commercial real estate deals day in and day out know what to look for?  (Rhetorical question of course) .  So why take the chance? Isn’t it time for you to offload this concern to a professional broker than can serve your best interests and not the landlords?