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Commercial Lease - Leasing an office space   6 replies   4 voices
TaraGrove Tara Platell on Aug 18, 2010 8:38am
Property Manager  TaraGrove Realty  Loganholme  Queensland
 

We are looking into leasing an office space in a shopping complex in our local area. I live in the area and the office spaces have been vacant for years. The leasing agent will not meet me on site to inspect the premises unless we arrange a meeting first to discuss the tenancy agreement that will be out in place.

Unfortauntely I am not a guru at commercial leasing, but is this the normal process for commercial leasing?

I really do not want to waste time for either of us if in the end the office space is not what we are after.

Scott_No_Mates Franc Vaccher on Aug 18, 2010 11:12pm
 

Hi Tara, it seems extremely unusual to even consider discussing terms before you have even inspected the property. How can you possibly make any rational discussion on terms such as previous tenant’s make good/condition of the premises/suitability of access/security/fitout contributions/lessor’s work/insurance requirements/DA for change of use/lease term/options/freight etc without first having ascertained whether the size, layout, natural lighting, phone line availability suit your needs.

Either this agent is incompetent, lazy or not working in their client’s interest.

JenTanner Jen Tanner on Aug 19, 2010 2:47pm
Staffer  apmasphere  Sydney  NSW
 

Does sound odd…. have you established that the leasing agent has actually been appointed by the owner? If so, it’s in the owners best interest that the agent show the premises to any prospective tenant (regardless of tenancy agreement discussions). Purely speculation but perhaps the agent hasn’t been appointed yet and is trying to gain ownership of the management by negotiating the lease? One question we can answer is, no, it is not the normal processing of commercial leasing.

TaraGrove Tara Platell on Aug 19, 2010 3:31pm
Property Manager  TaraGrove Realty  Loganholme  Queensland
 

Thank you to both of you, I didn’t think it was the normal process but we have met with the agent (off site at first – but then went to the complex to have a look around). And unfortunately the position that he wants to give us is not exactly what we need. Hopefully he will come up with something better :)

TracieH Tracie Harrington on Aug 20, 2010 8:57am
Owner & Principal  Harringtons Property Management  Brisbane & then the world  Queensland
 

Hi Tara,

A few things I have discovered in my commercial lease experience:

1. what agents tell you and what is on paper are 2 different things. Make sure you get all promises i.e. we have other tenancies and they will all be filled within 2 months (this simply is not the case insome instances),

2. watch out for whoever the major leaseholder is – if it is a major player then they tend to have a big say in what happens within the complex

3. ask who is actualy paying rent and who is not. In many instances the big lease holder in the centre has a contract with the vendor which says that 80% of the building must be leased and if not then they get to leave. This means that if the centre is lacking tenancies, new tenancies (and I have seen this happen) do not pay any rent at all. You can use this to your advantage.

 

TracieH Tracie Harrington on Aug 20, 2010 8:57am
Owner & Principal  Harringtons Property Management  Brisbane & then the world  Queensland
 

Hi Tara,

A few things I have discovered in my commercial lease experience:

1. what agents tell you and what is on paper are 2 different things. Make sure you get all promises i.e. we have other tenancies and they will all be filled within 2 months (this simply is not the case insome instances),

2. watch out for whoever the major leaseholder is – if it is a major player then they tend to have a big say in what happens within the complex

3. ask who is actualy paying rent and who is not. In many instances the big lease holder in the centre has a contract with the vendor which says that 80% of the building must be leased and if not then they get to leave. This means that if the centre is lacking tenancies, new tenancies (and I have seen this happen) do not pay any rent at all. You can use this to your advantage.

 

Scott_No_Mates Franc Vaccher on Aug 20, 2010 9:18am
 

Just to add to Tracie’s point, leases are generally ‘searchable’ documents if they have been registered. If you have such concerns, do a title search (which will list all the registered leasees/encumbrances), then select the leases of interest. It will cost a few $$ but will be well worth it if you have doubts about the validity of claims.

Not all leases will be registered eg leases under 5 years without options but it is still worth checking.

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