Expert: Peter Liebert, SIOR - 8/26/2008

Question
QUESTION: Hi Peter -

I've been looking at a number of different commercial lease agreements for a retail space.  Most of the agreements have the tenant responsible for procurring exterior signage for the space. I have seen one agreement that offers an option to have a signage allowance as part of the lease agreement.  The cost of exterior signage is playing a major role in my decision to open my retail business.  Do you think property management companies will consider an exterior signage package as part of the negotiation process? And why do they not include programs around this since so many retail businesses require signage?

ANSWER: It varies as you have described. Some owners will include signage and build the cost into the lease with whatever you are paying, others want the cost paid up front and others will provide it at "no cost."
Normally, landlord's rules on design, colors and placement are standard. National chains may get a waiver. Township Codes are also a factor. Also, if you have not done a retail lease before, consult your attorney or commercial Realtor. You should be able to audit CAM charges, managment fees, utility delivery fees added, etc. Best of luck with it./ Peter

---------- FOLLOW-UP ----------

QUESTION: Thank you for your response.  Would you say that larger property management companies would be more likely to offer such cost deferment programs?  I've been dealing mostly with smaller companies or individuals.  Thanks again for your response. - Terry

Answer
You should look at both. Property management differs substantially from larger properties to smaller/individual ownerships. The space value in cost and value to you will depend upon what traffic you want from being in a larger center compared to being in a smaller shopping district or free standing location.