According to my commercial real estate broker, leasing commercial real estate involves giving free months of rent, allowing for a build-out or build-out allowance, and also paying for utilities?! My broker tells me that it is customary to offer several months free rent here in Middle Tennessee. I am going to call on a close personal friend to help me with the minimal build-out required and will probably trade some web services for his labor. I do remember reading something about “triple net” leases and how triple net refers to the payment of utilities by the real estate owner. The extra stuff I was not aware of. I own an office condo and have an almost $1,400 monthly mortgage payment. The “rentable” square footage is 750 square feet.
This is not how I pictured it would go. I figured I would lease the space for an amount OVER the monthly expenses and make a profit…even if it was $5 a month. At the least, I thought I would break even. For those of you considering an investment in commercial real estate, make sure you take this into consideration. I realize it is one example but the commercial real estate environment is in tough shape.
I have a person interested in leasing the space for 3 years at between $20-$22.50 per square foot. If the deal goes down like my commercial real estate agent has advised me, then I will be losing money on this property every month. Welcome to the new world of commercial real estate. This is not a good deal. But, it is far better than paying all the expenses myself. I have had this property on the market for over a year and only one person has looked at the property. 2 people have looked at leasing it. Talk about no action. This should make you think long and hard about commercial real estate and the potential impact on our economy. Be very cautious.
I will update this post as things happen.