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We are a new board of a 90 unit building with not much experience and are facing a situation where a commercial tenants lease will expire in two years.
Some of the board would like to find a new tenant as the current one is not ideal while some of the board might be inclined to renew the lease.
How does this process work? And who are the participants? Would our management company be involved?
Any advice here is helpful.
2 questions...
may sound like a silly question, but have to ask....if it is a cooperative, i am going to assume the sponsor still owns the commercial? a separate investor? or does the cooperative corporation actually own the space according the the offering plan? (your collecting rent or maitenance?)
and; would raising rent effect your 80/20?
~AR
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First off, the cooperative owns the building; you have the right to choose whatever commercial tenant is best for the cooperative, regardless of the length of time your current tenant has been there.
It might be helpful to review with your managing agent or with a local realtor the rates for commercial leases in your neighborhood to ensure you are receiving market rates.
A realtor might also be helpful in discovering whether other commercial tenants might be available for your space, or others are looking for space in your area.
Your board needs to decide the optimal commercial tenant -- food-based tenants, for example, entail increased pest abatement, whereas a retail space might entail increased pedestrian activity. You state that your current tenant "is not ideal," but don't specify why; what IS your ideal?
Don't forget the 80/20 rule for "bad" income....
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