10-Point Checklist For Representing Tenants In New Construction Spaces

Have you have ever found yourself scrolling Google and AI for answers to vocabulary definitions, superlative explanations and who’s responsible for what during a development project for commercial tenants? If YES – then this is a must read for you.

Of course, never a short cut, our experience (including the pitfalls) - is your short-term education and perhaps your long-term gain…

#1 – Construction Site Plans (CSPs) – not to be confused with a master site plan. These are the blueprint to finished construction within each phase of the project. They undergo scrutiny from each municipal department, with the final check through a DRC prompting the “shell” building permit.

#2 – Civil Plans – the full-scale project picture critical to a tenant’s full scale understanding of feasibility. Beware- this file is LARGE and generally impossible as an attachment. It does exist – expect friction to obtain due to the several revisions it often undergoes. My recommendation would be to pay special attention to pages titled “master site plan and site data” and “master utility plan”.

#3 – Zoning & Planning – Despite wanting an answer and wanting it NOW – the best method of communication here is email. This enables a clear distinctive line of communication with emphasis on the quality of questions. In my experience these often require a follow–up 8-minute call for clarification. A preemptive approach is tremendously valuable and can empower recipients to adequately review prior to response.

#4 – Public Works – The most over-looked department. Start here.

#5 – Impact Fees – Pandora’s box. Literally. If you’ve ever driven through Florida at 2pm in the middle of summer with only giant raindrops hitting the windshield and highway water deteriorating your vision – that’s “impact fees”. There will never be a clear answer here, only formulas for careful budgeting and negotiation. There are generally shell and interior fees. Ranges per square foot and per type include anything from police to EMS to transportation to sewer to water and beyond. You should know not only the quantity of interior fixtures, but importantly the average daily flow (ADF) in gallons per minute (gpm) which can be estimated by an experienced contractor, an architect or engineer.

#6 – Feasibility – TEAM. I once sent over the quantity of fixtures to my GC asking for GPMs noting “if it takes you more than 10 minutes to figure this out don’t bother”…well we both laugh about this now. It took more than 10 minutes. I was also relying on a GC’s expertise to deliver versus walking into the unknown which is a sure deal killer. I was able to turn the answer to my client in less than 24hrs not because of my expertise, but of my ability to rely on a team developed through experience and trust.

Designer Talks – it’s the small things that have major impact, more so day-to-day operations like the delivery zone, trash, parking…are these areas designated? What’s the volume? If you can ever pose questions of reality to a listing broker whose response is “actually we have not talked about that, I don’t really know…” not only are you doing your job, but also gaining respect with colleagues who will want to work with you on future deals.

#7 – Proforma – Let the Landlord rep provide the LOI and expect it will reflect standard 3%-4% escalators....this is boiler plate. Grab the calculator and play with the numbers. A 10-year deal is often required for a new build-out for an operator to even break even on the investment costs. While the LL has to prove strong financials for the 120-month term for bank financing, there are ways for this to pencil. As a guide, national deals land on a per-square-foot flat rate for years zero through 5 with an aggressive 10% escalator at year six holding flat through year ten. See if this can help get your deal to the finish line.

#8 – Options – Protect the investment. The ROI typically won’t show until a decade plus for your client. Instead of additional lengthy terms where markets shift, suggest several five-year terms.

#9 – Exhibit “B” – Most often the work letter. Don’t get caught in the weeds on this one. At first glance it can be overwhelming. Rely on your experience and the professionals who will be bringing the project to life. Providing this document ahead of a call is an efficient way to address red-lines for this portion.

#10 – Oh Yeah – Don’t forget your value extends further than being JUST a broker. Commercial real estate is interwoven with industry verticals. As rule of thumb, if your response isn’t “oh I have a guy / gal for that I can refer you” – get out there and network more. 

Are you a commercial tenant looking to lease a new construction space? Let me be your guide-- contact me at 330-360-9229 or danielle@thecommercialblueprint.com