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Sorry, why do you need a contract for this? Why would a company buy space and then resell it at a loss (unless property values collapse in between)? And why would the original owner care?


Why the original owners would care is beyond me. But a friend of mine was looking at space in the area for a store he wanted to open (and ended up opening elsewhere). During his search, he got tired of coming across all these high priced leases for space in a building, so he considered trying to build his own building and then leasing out the space he wasn't using for his store. When he tried to do this, he was confronted with the statements in the contracts for the land that any space he leased must be priced at a certain value for a certain amount of years. It wasn't that he would take a loss, it was that the land owners were demanding such a high price for any commercial lease on the property. I don't have the full details as this was several months back, but I do remember him trying to do this both in this part of town, and also further north where Home Depot had bought a fair amount of land around their proposed store site.

Te insane part was by his calculations, if he bought a certain piece of land and built a building on it and leased out most of it, the building and land would be paid for in 5 years at the prices he would have to charge. Sounds like a great deal until you also realize that he couldn't lower the price just a bit to ensure he got a lease. Odds are, this part of town will slow in growth, and his forced price will look too high in just a few years.

He will probably only stay in the place he ended up for a short amount of time. Seems the owner likes raising the price yearly, and this ends up driving out the stores there over time. Having worked near this place for 5 years now, I can confirm this happens with quite a regular frequency. The shops there now weren't there back when I started. Most moved just a few blocks down the street to avoid the rising prices.

Commercial leases and land agreements seem to be horribly complex and just seemingly random in some of the stipulations.