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Query regarding the leasing of commercial property

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  • 16-04-2009 2:42pm
    #1
    The Minstrel
    Registered Users Posts: 386 ✭✭


    Couldn't see a forum for commercial property so here goes... Just wondering if someone could shed some light on the obtainingm of a lease for a commercial retail unit. I wanted to contact a letting agent about a vacant retail unit, but am worried that I might come across as a complete and utter greenhorn.

    So, what type of questions should I be asking? One of the things that has me flummoxed is this "key money" that people keep talking about.:confused: What should one be on the look out for etc when negotiating a lease?


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    #2
    sneakerfreak
    Closed Accounts Posts: 427 ✭✭sneakerfreak


    Key Money is when the current tenant wants to exit the premises but has time left on his lease and wants to sell the remainder of his lease to a new tenant.

    It is dead money,once you pay this KM you will still have to pay rent.

    KM was a popular thing during the boom years and many people payed way over the odds for it.

    I would personally hate to hand over KM,most of the time it is a bad indication of how your business will fare in that unit unless the current tenant is inept or involved in a totally different type of business as you.

    The amount of KM is usally based on unit size and location and how much time is left on the lease.

    If the unit is not highly sought after then after a while the tenant will usually give up and exit the premises and you can then rent direct from the landlord for cheaper rent and no KM.

    Hope this helps.

    When talking about commercial premises important factors are rates and usage (is it retail or services or hot food etc?).


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    #3
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    At the moment its normal practice to take a unit rent free for 'x' number of months. The rent-free period varies depending on how valuable a tenant you are perceived to be- but with multinational retailors the norm is now in excess of 6 months.

    It used to be practise to have leases which specified upward only reviews etc- these are long gone though.

    When you do sign a commercial lease- keep in mind that you will be held to the terms of the lease- its not like a residential lease, the landlord will bankrupt you to enforce the terms of the lease (there are between 20 and 30 cases a week in the court system). This is a big difference between a residential and a commercial leases......

    As a potential tenant- you are in a very strong position at the moment- almost 35% of all commercial property in the country is vacant. I'd be making a list of what you want from the landlord.

    With respect of keymoney- its a practise that is well and truly dead.


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