How to list/rent storefront commercial space

Question

Hello All!

I would love advice on a commercial property. It is a mixed use, some apartments on the lower level. On the upper level, which is storefront, on main street in a small town in Nebraska is approximately 3500 SqFt of unused vacant storefront commercial space. I would like to rent the commercial space but would love any advice on how to advertise and what is common to offer. My biggest question is how to structure a commercial lease. I have been exposed to this and I do understand every deal is structured different depending on the needs of the owner and lease holder. I am just curious if anyone has any advice they would be willing to share.

The biggest issue is that my resources are currently tied up on renovating the existing apartments.  The commercial space is raw (previous grocery store) and will need a build out.  So, with that build out needed is there a specific way anyone would propose listing it?  Should I list it as is, with a raw space lease price and allow them to complete their own build out?  Should I offer free rent for a period of time, and have the future tenant invest their own funds towards the renovation?  Any advice on previous experience with raw commercial space would be greatly appreciated!

Thank you for taking the time to read this and offer any wisdom!  :)

-Ty

Russ Kitzberger · Answer

If you are just a one off landlord with a single space, your best bet is to hire a broker to market the space and advise based on a deal by deal basis as you negotiate with prospective tenants. It is all area dependent; A solid tenant may require TI whereas a local startup may not be able to command it.  The % you are going to spend with a contingent commission agreement can be significantly less than your time and actual costs will be trying to get a handle around the retail market for just one space that is ancillary to your expertise in residential rentals.  I tell new and aspiring commercial real estate agents: the cost to get into the data to participate in the market is $10-20k. You have to have volume to make the numbers work.For instance, you may spend several thousand dollars for marketing your first space.  You will have attorney fees for each LOI you get from a prospective tenant. Then there is vetting the tenants, co-broker compensation, finding contractors, zoning issues, tenant mix, permits, etc.

Alas, if you decide to market this without hiring someone to give you specific advice and good marketing; my suggestion is to put a for rent sign up and allow tenants to propose terms to you. Let them hire the expertise and pay nice broker commission to entice agents to give the tenant advice.

Chris Seveney · Answer

If you cannot complete the renovation inside for the commercial space then your best bet would be to offer free rent and let the tenant build out the space.

The other option is to bring on an equity partner that can get it in better shape so it has a better chance of renting.

Devante S. · Answer

Hi Ty, hope all is well man!

There are a lot of scenarios that could potentially come out of this. If you truly want the space leased fast, and because it needs work, I would contact local commercial management companies and sales people and list with them because they might have potential clients looking. If you want to go more hands on deck, I would start calling around to directly contact leads yourself. Sure, you could list a place like this on loop-net or other similar platforms, but considering you're in a small town and it needs some work I think your best bet is going to be just finding an interested buyer (local) who would like to help get things in shape. Try contacting organizations such as local government, church groups, or contact the city chamber to see if they can run an ad for their business investors and entrepreneurs. Sounds like a great place for a gym, cafe, or office space. Also try posting in real estate facebook groups in your area. Whatever you do with pricing and leasing, just make sure utilities and insurance covered at minimum, and that you have a set parameters of just how much renovation will be done so you are aware if its going to interfere with current residents units.

I help new landlords learn how to lease their properties from start to finish. Check out my profile if you're interested in learning more. Good Luck!

Ty Doke · Answer

Hey Chris,

Thank you for taking the time to share your thoughts on this!  I do agree, I believe these are two great options to consider.  Thanks again for your input Chris!

Have a blessed day!

How to list/rent storefront commercial space

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