Questions to Ask a Commercial Real Estate Agent About a Property
Questions for a buyer or tenant walking a commercial property with an agent, covering who the agent works for, what the quoted rate actually includes, zoning and permitted use, the age of the building systems, parking and power, and what the owner cares about besides price.
20 questions, each with the reason to ask it · includes a conversation guide
The questions
Open any question to see why it works.
- 1
Are you the listing agent here, or can you represent me?
The agent who shows you the space is usually paid by the owner and may be allowed to represent both sides once you sign a disclosure. Settle this before you mention your budget or your move-in deadline, because anything you tell a listing agent goes back to the owner.
- 2
Why is this on the market, and how long has it been listed?
Long marketing time is leverage only if you know the reason for it. A space that has sat a year because of a low clear height or an unusable loading dock is a different problem from one that sat because the owner was chasing a number and has now stopped.
- 3
Has the asking price or rate moved since it first listed?
Reductions tell you the owner's real number is below the sign. Ask for the dates: three cuts in six months is a motivated owner, one cut in two years is someone who is not really selling and will waste your due diligence money.
- 4
Is that rate gross, modified gross, or triple net, and what sits on top of it?
A rate that looks cheap per square foot often excludes taxes, insurance, and common area maintenance, which together can add half again to the number. Ask for total annual occupancy cost per square foot so you can compare buildings on the same basis.
- 5
What were the actual operating expense charges for the last three years?
Estimates are a projection, reconciliations are what tenants really paid. Three years of history shows the trend and flags a building where a tax reassessment or a deferred roof project is about to arrive in your monthly bill.
- 6
What is the zoning, and is my use permitted by right?
Permitted by right means you file for a permit. Anything else means a hearing, several months, and a real chance of no. Get the zoning designation in writing and confirm it with the municipality yourself rather than trusting the flyer.
- 7
What is the certificate of occupancy for, and does it cover what I want to do here?
A building can be zoned correctly and still hold a certificate for a different use, which only surfaces when you apply for permits. Changing the occupancy classification often triggers sprinklers, exit changes, and accessibility upgrades at your cost.
- 8
Who else is in the building, and when do their leases end?
Neighbours set your hours, your noise, your smells, and your share of the parking lot. Lease expiry dates also tell you whether you are about to be the last tenant in a half empty building or the one living through its renovation.
- 9
How much of this building is vacant, and how much of the submarket is?
Ask for both numbers. High vacancy in this building while the submarket is tight points at a problem specific to the property. High vacancy everywhere means you should be negotiating concessions rather than worrying about the building.
- 10
How old are the roof, the HVAC units, and the electrical service?
Under a net lease these become your expense, and a rooftop unit near the end of its life is a five figure surprise in year two. Ask for install dates and recent service records instead of accepting a word like newer.
- 11
What power comes into this space: amps, voltage, and phase?
Kitchens, machine shops, and anything with a server room fail here first. Upgrading service runs on the utility's timeline, not yours, so this answer decides whether you open in three months or nine.
- 12
Is there a Phase I environmental report, and what did it turn up?
Standard on purchases and increasingly requested on long leases, particularly where there was ever a dry cleaner, a filling station, or auto repair. A finding that pushes you to a Phase II changes both your timeline and your lender's appetite.
- 13
How many parking spaces come with this space, and are any of them reserved?
Parking is usually allocated as a ratio per thousand square feet and shared with everyone else. Visit at the busiest hour and count, then ask what happens to your spaces when the tenant next door doubles its headcount.
- 14
Is the square footage usable or rentable, and what is the load factor?
You pay on rentable and you occupy usable, and the gap is often twelve to twenty percent. Two buildings quoting an identical rate can differ by thousands a year once the load factor is applied, so ask for both numbers.
- 15
What improvement allowance and free rent are landlords actually giving in this building?
Concessions move long before face rates do, because owners protect the headline number for their lender. The answer tells you what is genuinely negotiable even when the asking rate is presented as fixed.
- 16
Who pays for the roof, the structure, the parking lot, and HVAC replacement?
This is the whole argument in a net lease. Ask specifically whether capital replacements can be passed through, and whether they are amortised over the useful life of the item or billed to you in the year the work happens.
- 17
What deals have actually signed nearby in the last six months?
Asking rates are opinions, signed comparables are facts, and agents who work a submarket know them. An agent who cannot produce any either does not really cover this area or would rather you did not see how far rates have moved.
- 18
Besides price, what does this owner care about?
Term length, tenant credit, a personal guarantee, or a fast close can be worth more to an owner than the rent number. Learning the priority list is how you trade something that costs you little for something that would cost you a lot.
- 19
What is planned nearby: construction, road work, or a rezoning?
An agent has to answer honestly but is not obliged to volunteer what is coming. A two year road project or a competing development across the street changes the value of the exact thing you are paying a premium for.
- 20
If I need out early, what are my options: sublease, assignment, or a termination right?
Most businesses guess their space needs wrong within three years. Ask whether the owner's consent can be withheld for any reason at all, who keeps any profit on a sublease, and whether an early termination clause exists at any price.
Touring commercial space without getting surprised
Practical guidance for the conversation itself.
Before you tour
Before you tour
Decide whether you need your own agent
A tenant or buyer representative is normally paid out of the commission the owner already budgeted, so having one rarely costs you anything directly. Without one you are negotiating against a professional whose duty runs to the other side.
Write down your real requirements first
Clear height, power, floor load, dock doors, restrooms, hours of access, and the drive time your staff will accept. Requirements written before you fall in love with a space are the ones that survive the tour.
Bring your timeline and your permit reality
Design, permitting, and build out routinely take longer than the lease negotiation. Ask on the first visit how long the last tenant improvement in this building took from lease signature to occupancy.
Reading the numbers
Reading the numbers
Quoted rates are the least comparable part of a commercial deal. Normalise them before you decide anything:
- Convert every option to total annual cost per usable square foot, including operating expenses, utilities, parking, and any janitorial you have to buy yourself.
- Ask what annual escalation is built in. A three percent bump compounds into a very different number over a ten year term.
- Separate the improvement allowance from the rate. An allowance is a one time payment, a lower rate lasts the whole term.
- Find out what is excluded from the operating expense pool, and whether there is a cap on controllable expenses.
- For a purchase, ask for the rent roll, the trailing twelve months of income and expense, and the current loan terms if the debt is assumable.
Warning signs
Warning signs
- The agent will not confirm in writing who they represent.
- Operating expense history is unavailable, or only an estimate is offered.
- You are told the zoning is fine but nobody will name the designation.
- Building system ages are described with adjectives rather than dates.
- Pressure to sign a letter of intent before you have seen the actual lease form.
- No recent signed comparables are offered, only asking rates from listings.