A prospective tenant wants an elevator in the building. An elevator would cost about $750K to install. The building is worth about $5-6M unoccupied. The last tenant was paying about $450K/year in rent.
If the tenant would agree to a long-term lease, I think that an elevator install makes sense. What would be a reasonable lease term for this kind of an upgrade?
If the prospective tenant wants an elevator installed, what is an appropriate lease term to compensate for the cost?
byu/No_Reveal3451 inRealEstate
Posted by No_Reveal3451
2 Comments
Seems like a fairly reasonable request for what I assume is a large, multistory building. Maybe just do a normal rent increase (5-10%) and lock them into a multi-year lease to ensure you recoup your costs. In the long run you’re going to benefit from the added value of the upgrade.
I think a 6 year term is common for business leases? Maybe come at them with that and see what they think.
You need to talk to an architect about ripple effects