Pricing Commercial Realestate
:-? i recently purchased 5 units and a store front approx. 750 sqft the lease on the store (grocery store) will be up on July 31. current rent is 500 per month. The unit is in a fair to poor area (mostly blue color and public assistants tenents)
my question is how do I determine how th price the rental on the store :-? :-?
look for comparable listings, ask a real estate agent, ask a local (i don't know how big the area is your talking about) realtor if they have closed any deals recently, guess, use the old rent, ask the person that wants to rent it what they are renting at right now...if its a small town, it can be difficult, you could set the rent low and charge a percentage of retail sales if its a good retail outlet...
The best way I've found is to become the store owner (figuratively). That is to say go and shop around as if you are going to open a store just like the one who is renting the space now and see what other landlords would charge for a similar space. It may be hard if there are not a lot of similar properties in the area but check out any "for rent" signs in other buildings.
Also try to meet with the current tennant and pick that person's mind about how much the rent could be changed. Be open to other value additions such as having the tennant agree to fix certain things (for instance a hardware store can be reasonably exected to make a lot of repairs rather than have you fix it as landlord), or take on another utility or their trash dumpster may serve for the whole building. The idea of a percentage of the profits is workable in some upscale places.
Agree to cross market for them. Use space on your website, the side of your building, or mailers to promote their business. You do the marketing anyway just pigyback them and they will divert some of their marketing money to you instead of the newspaper.
In this instance the grocery store has some possible value that you can use. Maybe they will sell you some things at their cost (i.e. cleaning supplies, your favorite ice cream that you eat in bulk, something for a special occasion, or whatever). This is no extra cost for them since you actually pay for the items, all they have to do is increase their order which will actuall help them by increasing their volume with their supplier, and you get a great discount on some products you use.
Win-win.
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