New to commercial real estate and evaluating lease

April 05, 2026

by a searcher from Carnegie Mellon University in Denver, CO, USA

I am evaluating several deals where the seller own the property, but without commercial real estate experience, I am having a hard time checking if the seller will give me an outrageous deal on lease. What is the best cost-effective way to gut check if the $ per sqft/year is reasonable? Do I hire a commercial real estate broker? For example, the seller wants to charge $26/sqft/yr for a 2200 sqft warehouse. I am seeing that on the same street 2 mins away, the lease rate for a 22,500 sqft industrial building is $14/SF/yr. This is a big difference, but also a big difference in sqft. In other areas of the city, I am seeing $20-35/sqft/yr for 1500 sqft warehouse.

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Great question. Your best bet would be to hire a local realtor to represent you in the lease negotiations or to at least provide you with rental comps so you have what you need to go back and negotiate with the seller. There are a lot of nuances to determining local real estate values and rental rates. The difference in rent per square foot can sometimes be substantial for properties just a few blocks from one another due to economic or demographic factors. Property condition can also play into the value quite a bit as well. However, industrial rental rates tend to be more consistent in most markets. We have had some success where the subject property may be overbuilt and at a higher rental rate, getting lenders to agree to a shorter team lease so that the buyer can eventually move the business to cheaper space on a per square foot basis, assuming the specific location is not of great value to the business.

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