I have started looking at commercial and industrial property however are am unsure about a few things. Can someone please tell me exactly how the leases work. I.E If the lease is 5×5 or 3×3 etc does this mean 5 different 5 year leases which they can break after each stint? Also i’ve noticed that not all tenants are paying the outgoings in all circumstances. Is this something that is usually negotiated or is it generally a standard issue? Also, what are the main things to be looking out for when looking at commercial properties. Any information and help would be very much appreciated… THANKS!
5×5 means a 5 year lease with an option after that lease has expired for another five year lease. If it’s something like 3x5x5 that means a 3 year lease with two additional options of another 5 years each.
The outgoings expense is usually negotiated on a lease by lease basis.
A commercial/retail/industrial property is usually as valuable as it’s current lease and leasability. If you’ve got a great looking office building with everything that opens and shuts, but nobody wants to rent it, it’s worth about as much as the materials it’s built with (scrap value).As a general rule for residential; location, location, location. For non-residential; leasability, leasability, leasability.
Hope this helps…G7
Also, have a think about which kind of industries / businesses are likely to prosper in the economic conditions of the present and future. Stay away from leases where the company has an uncertain outlook and make sure the property is versatile.
Cheers,
F.[cap]
You must be logged in to reply to this topic. If you don't have an account, you can register here.
