Commercial Sales · the broker's view
Sell an Office Building With the Lease and Capital Picture Ready
An office property's story is more than a rent roll. A buyer wants to know when each lease expires, which tenants are likely to renew, what the roof, the elevators and the air conditioning will need, and how the economics compare with the building down the street. Put those answers in a package before buyer diligence begins, so the first serious conversation is about price and not about missing paper.
Review My Office Building Sale
The Short Answer
An office building is valued on the income it will still be earning after the sale, so the leases matter more than the square footage. A seller should have a rollover schedule, the allowances and commissions still owed, and a list of capital work, each supported by a document. At BreakThru Realty a licensed commercial agent prepares and markets the building, and Tyson E. Sam, the broker of record, is accountable for the sale.
Today's Rent Roll Is a Snapshot. A Buyer Underwrites a Calendar.
Two office buildings can report the same occupancy and the same income this year and still be very different purchases. In one, the leases end in different years and the largest tenant has just renewed. In the other, more than half the rent comes from leases that end within twenty-four months of the closing.
A buyer of the second building has to budget for what follows each expiration: months with no rent from that suite, an improvement allowance for the next tenant, leasing costs and perhaps a lower rent. None of that shows on the rent roll. It shows on a rollover schedule, and a buyer left to build that schedule alone will build it with cautious assumptions.
The capital picture works the same way. A roof, an elevator modernization or an air-conditioning replacement that the seller can date and document is a known cost. One the buyer discovers during inspections becomes a reason to reopen the price.
A Sample Lease Rollover Grid
This is the shape of the schedule a buyer's analyst builds first. The building, the suites and every value in it are fictional and hypothetical. No real tenant or property is described.
| Suite | Rentable area | Base rent per sq ft | Annual increase | Term remaining | Termination right | Improvement obligation | Rolls in |
|---|---|---|---|---|---|---|---|
| Suite A | 6,000 sq ft | $32.00 | 3% | 5 years 2 months | None | None outstanding | Year 6 |
| Suite B | 4,500 sq ft | $30.50 | 3% | 1 year 4 months | None | None outstanding | Year 2 |
| Suite C | 3,000 sq ft | $29.00 | Fixed steps | 2 years 9 months | Tenant may leave early with notice and a payment | None outstanding | Year 3 |
| Suite D | 2,500 sq ft | $33.00 | 2.5% | 6 years 8 months | None | $40,000 of allowance not yet drawn | Year 7 |
| Suite E | 4,000 sq ft | Vacant | None | None | None | To be agreed with a new tenant | Now |
Hypothetical values, with years counted from the closing. Read down the last column: Suites B and C, 7,500 of the 16,000 leased square feet, come up within three years, and Suite C can leave sooner. That is what a buyer asks about before anything else.
Two Different Buyers Read the Same Building
Which one the building suits decides what goes at the front of the package.
A business buying it to occupy
An owner-user is replacing a lease with ownership.
- Whether the floor plan, the parking and the access fit how the business works
- How soon it can take possession, and whether any tenant's lease stands in the way
- What the building costs to own each year against what the business pays in rent now
- The condition of the roof, the elevators and the mechanical systems, because the repair bills become theirs
- How it will pay: a business planning to borrow should consult a lender before making an offer
An investor buying a multi-tenant building
An investor is buying the leases and the work of keeping them.
- Net operating income that can be traced to leases and bank records
- How much rent expires in each of the next several years
- Each tenant's renewal options, termination rights and unpaid improvement allowance
- What the building recovers from tenants when operating expenses increase
- The capital the building will need during their ownership
The Records a Buyer's Underwriting Starts From
Four folders. Each item is something the owner already holds or can request. None of it has to be created for the sale.
Leases
- Every lease with its amendments, commencement letters and any side agreements
- A one-page abstract of each: term, rent steps, options, termination rights and who pays which expenses
- Security deposits held, and any rent paid in advance
- Improvement allowances and leasing commissions still owed under signed leases
Income and expenses
- The current rent roll, dated
- Operating statements for the last three years and the year to date
- The expense reconciliations sent to tenants, with each lease's base year or expense stop
- Property tax bills and the insurance policy with its premium
Building and capital
- Ages and service records for the roof, elevators, air conditioning and fire systems
- Capital work completed, with invoices, and work planned, with estimates
- Any building recertification or inspection report the county or city requires: confirm with the local building department what applies
- Floor plans and the measurement method behind the rentable area
Site and title
- Survey, title policy and any easements
- The parking count and any shared-parking agreement
- Service contracts, and whether each can be assigned or cancelled
- Zoning confirmation for the current use
What is published and what is released only after a confidentiality agreement is settled with the owner before marketing begins.
Questions Worth Asking First
- What affects the value of an office building?
- For a leased building, the income and how long it is likely to last: the rent each tenant pays, the years left on each lease, the strength of the tenants and how much of the operating cost they reimburse. Then the costs a new owner faces: vacancy to fill, allowances and leasing costs when leases turn over, and capital work on the roof, elevators and mechanical systems. Parking, access and condition affect how easily space re-leases. For a building a business will occupy itself, comparable sales and the cost of leasing similar space carry more weight than the rent roll.
- Why does lease rollover matter?
- Because every expiration is a point where income can stop. When a lease ends the tenant may renew, renegotiate or leave, and a departure usually means months without rent from that suite, money spent preparing it and a leasing cost to fill it. A buyer adds up how much rent expires in each year after the purchase. If a large share ends close together, the buyer prices that risk, and a lender may ask for reserves. A seller who knows which tenants intend to stay, and can show a renewal already signed, answers with evidence instead of a hope.
- What records should a seller prepare for buyer underwriting?
- Start with the leases and their amendments, a dated rent roll and three years of operating statements, because those let a buyer rebuild the income. Add the expense reconciliations sent to tenants, tax and insurance bills, and a list of allowances or commissions still owed. For the building: service records and ages for the roof, elevators and air conditioning, completed capital work with invoices, the survey, the title policy and the parking count. An attorney should confirm what each lease lets you disclose. Estoppel certificates come later, once a buyer is under contract.
Who Does What
- A licensed BreakThru Realty commercial agent does the day-to-day work and is your main point of contact.
- Tyson is the broker of record: the licensed Florida broker accountable for the brokerage and every agent under it. He reviews the offers, contracts and closing statements that move through the company.
- Which agent works with you, and how the brokerage will represent you, is set out in writing before any work begins.
| Broker of record | Tyson E. Sam, Founder and Broker of Record, BreakThru Realty |
|---|---|
| Florida real estate license | 3565210 |
| Also listed as | Tyson Sam, the spelling in MLS records and on the listing sites they feed |
| Brokerage | BreakThru Realty LLC, a licensed Florida real estate brokerage |
Brokerage compensation is negotiable and is agreed in writing before any work is marketed. No fee or rate on this page is a standard one.
BreakThru Realty is a real estate brokerage. It does not give legal, tax, lending, engineering or appraisal advice: an attorney, a CPA, a lender, an inspector or an appraiser answers those questions, and a broker's opinion of value is not an appraisal.
This Page Explains the Thinking. The Service Page Does the Work.
What the brokerage does for you, step by step, and how to start is on its own page: Sell an office building.
Every figure on this page is an illustration: arithmetic on assumed inputs, shown so the reasoning can be followed. None is market data, a comparable sale, an appraisal, a forecast or the result of a BreakThru Realty transaction.
Review Your Commercial Property Options
Tell us what you own and whether you are weighing a sale, a lease or both. A licensed BreakThru Realty commercial agent replies within one business day to go through the income, the leases and the questions a buyer or tenant will ask. No documents are needed to start.
The form asks for: I want to; Property type; City or county; Approximate building size or acreage (optional); Occupancy; Asking range, if you have one; then your name, an email address or a phone number, and your consent to be contacted about the request. It asks for no documents.
Your request is with BreakThru Realty. A licensed commercial agent replies within one business day to talk through the property, its income and your options. Nothing is marketed or signed unless you decide to go ahead.
Prefer to talk? (786) 914-1017 · sales@breakthrurealty.com
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