Commercial Real Estate FAQs

A commercial real estate broker helps businesses, property owners and investors navigate the purchase, sale and leasing of commercial property.

Depending on your needs, a broker may help identify properties, evaluate market conditions, analyze financial considerations, coordinate property tours and due diligence, develop a marketing strategy and negotiate the terms of a transaction.

Lloyd Commercial Real Estate represents buyers, sellers, tenants and landlords across a variety of commercial property types.

Ideally, you should involve a commercial real estate broker early in the process.

A broker can help you understand the market, establish realistic expectations, identify opportunities and avoid spending time evaluating properties that may not fit your goals.

For businesses considering a new location, expansion, lease renewal or commercial property purchase, involving a broker before making commitments can also provide valuable market insight and additional leverage during negotiations.

You are not required to work with a commercial real estate broker, but having experienced representation can make the process significantly easier.

A broker can help identify available office, retail, industrial and other commercial space for lease, coordinate tours, gather market information and compare options based on more than the advertised rental rate.

Operating expenses, parking, visibility, access, build-out requirements, lease structure, zoning and future growth needs can all affect whether a property is the right fit for your business.

Brokerage fees vary depending on the transaction and representation agreement.

In many commercial leasing transactions, brokerage commissions are paid by the property owner, although the specific arrangement depends on the property and transaction.

Your Lloyd broker will explain any applicable fees and representation terms before you move forward.

Look for a broker who understands your goals, communicates clearly and has experience with the type of property or transaction you are considering.

Local market knowledge, responsiveness, transaction experience, industry relationships and the ability to provide useful market and property information are also important considerations.

When choosing a commercial real estate broker in Sioux Falls or another market, you should feel confident that your broker understands both the local market and your specific business or investment objectives.

Start by identifying the requirements that matter most to your business, including location, approximate size, budget, parking, visibility, zoning, access and desired move-in date.

A commercial real estate broker can help identify properties that fit your business needs, whether you’re looking for office, retail, industrial or warehouse space.

Your broker can also help compare the total cost and terms of multiple options rather than evaluating properties based on asking rent alone.

Commercial lease rates are often quoted as a dollar amount per square foot per year, although some properties may be marketed using a monthly rental amount.

For example, a 2,000-square-foot commercial space offered at $20.00 per square foot annually would have base rent of approximately $40,000 per year, or $3,333 per month, before any additional operating expenses.

The total occupancy cost will depend on the lease structure and expenses associated with the property.

NNN stands for triple net.

In a triple-net lease, the tenant typically pays base rent in addition to its proportionate share of certain property operating expenses, commonly including real estate taxes, property insurance and common area expenses.

The exact expenses included vary by property and lease, so tenants should consider both the base rental rate and estimated NNN expenses when comparing commercial spaces.

CAM stands for common area maintenance.

These expenses generally relate to maintaining and operating shared areas of a commercial property. CAM expenses may include items such as landscaping, snow removal, parking lot maintenance, common area utilities and other property operating costs.

The expenses included and the way they are calculated vary by property and lease.

In a gross or full-service lease, some or most property operating expenses are incorporated into the rental rate.

In a triple-net, or NNN, lease, the tenant typically pays a base rental rate plus its share of specified property expenses.

Because commercial lease structures vary, comparing properties based only on the advertised rental rate can be misleading. A commercial real estate broker can help compare the estimated total occupancy cost of different options.

There is no single square-footage formula that works for every business.

The appropriate amount of space depends on factors such as your number of employees, workspace configuration, customer traffic, storage requirements, equipment, parking needs and anticipated growth.

A commercial broker can help translate your operational requirements into a space requirement and evaluate whether available properties can accommodate both your current needs and future plans.

The right commercial location depends on how your business operates and serves its customers.

Important considerations may include visibility, traffic patterns, traffic counts, accessibility, parking, surrounding businesses, area demographics, zoning, signage opportunities, proximity to customers or employees, lease costs and future growth potential.

A commercial broker can help evaluate these factors alongside available property options and market conditions.

Tenant improvements, often referred to as TI, are modifications made to commercial space to accommodate a tenant’s needs.

Improvements could include walls, flooring, lighting, plumbing, electrical work, offices, restrooms or other modifications.

Who pays for the improvements, how they are completed and whether the landlord provides a tenant improvement allowance are typically negotiated as part of the commercial lease.

A tenant improvement allowance is an amount a landlord agrees to contribute toward improvements to a leased commercial space.

The amount, eligible improvements and payment structure are negotiated as part of the lease. Depending on the transaction, the tenant may be responsible for improvement costs above the agreed-upon allowance.

A letter of intent, commonly called an LOI, is used to make sure the parties are generally aligned on the key deal points before moving into a formal lease or purchase agreement.

Depending on the transaction, an LOI may address rental rate or purchase price, lease term, due diligence periods, tenant improvements, closing timelines and other important business terms.

It is typically a preliminary step in the negotiation process and helps reduce misunderstandings before attorneys or formal lease documents become involved.

The timeline varies depending on your requirements, the availability of suitable commercial properties, lease negotiations and whether improvements are needed before occupancy.

Businesses with specific location, size, zoning or build-out requirements should begin exploring commercial space for lease well before their current lease expires or their desired move-in date.

A commercial lease renewal is an opportunity for both tenants and property owners to review the existing lease and determine whether the terms continue to meet their needs.

The renewal process may include evaluating current market conditions, rental rates, lease term, operating expenses, space needs, property plans and any proposed changes to the lease.

Starting the conversation early gives both parties time to evaluate options, address potential changes and work toward terms that support a successful continued tenancy. A commercial real estate broker can help provide market insight and guide either party through the renewal process.

A commercial real estate broker can help identify commercial property for sale based on your location, budget, property type, intended use and long-term objectives.

This may include office buildings, retail property, industrial property, investment real estate, commercial land, businesses, and other opportunities.

A broker can also help evaluate whether a property fits your operational or investment goals and coordinate the transaction from the initial property search through due diligence and closing.

Commercial property should be evaluated based on both the real estate itself and how it supports your business or investment goals.

Important considerations may include location, zoning and permitted uses, property condition, financing, operating expenses, real estate taxes, environmental conditions, utilities, infrastructure, future capital improvements, existing leases and potential resale or leasing opportunities.

A commercial real estate broker can help coordinate the transaction and identify issues that should be investigated during the due diligence period.

Due diligence is the period in which a buyer investigates a commercial property before completing a purchase.

Depending on the property and transaction, this may include reviewing title, surveys, zoning, existing leases, property financials, building condition, environmental conditions, utilities, access, easements, property taxes and other property-specific matters.

Commercial real estate due diligence can vary significantly based on the property type and its intended use.

Commercial real estate financing can come from banks, credit unions and other lenders, with loan terms depending on factors such as the property, borrower, intended use, down payment and financial performance of the asset.

Financing for an owner-occupied commercial property may look different from financing for an investment property or development project.

It is often helpful to speak with both a lender and commercial real estate broker early in the process.

The right decision depends on your business, financial position and long-term plans.

Buying commercial property may provide greater control over the property and the opportunity to build equity, while leasing commercial space may offer greater flexibility and require less upfront capital.

Factors such as growth expectations, location needs, financing, property availability, maintenance responsibilities and how long you expect to occupy the space should all be considered.

Lloyd Commercial Real Estate works with property owners to position and market available commercial property, identify prospective tenants and negotiate lease terms.

Depending on the property and strategy, our approach may include market analysis, professional property marketing materials, digital exposure, targeted outreach, broker communication, property tours and ongoing communication throughout the leasing process.

Our goal is not simply to advertise vacant commercial space, but to position the property effectively within the market and connect it with businesses that may be a strong fit.

Lloyd works with commercial property owners to evaluate their property, develop a pricing and positioning strategy, create professional marketing materials, expose the opportunity to prospective buyers and brokers and negotiate the transaction through closing.

The strategy may vary depending on whether the commercial property is owner-occupied, leased, vacant, investment real estate, development land or another specialized asset.

The value of commercial real estate depends on a combination of market conditions and property-specific factors.

These may include location, property type, building condition, comparable sales, current rental rates, existing leases, rental income, operating expenses, development potential and investor demand.

Lloyd Commercial Real Estate can prepare a Broker Price Opinion to help property owners better understand potential market value and positioning.

A Broker Price Opinion, commonly referred to as a BPO, is an analysis prepared by a commercial real estate broker to provide a property owner with an estimated market value and recommended positioning strategy.

You may also hear similar analyses referred to as a Broker Opinion of Value, or BOV. At Lloyd Commercial Real Estate, we use the term Broker Price Opinion.

A BPO may consider comparable transactions, current market conditions, property characteristics, income and expenses, existing leases and other factors relevant to the property.

It can be a valuable starting point for owners considering whether to sell, refinance, hold or reposition commercial real estate.

Commercial real estate investments should be evaluated based on both the property itself and the financial performance of the opportunity.

Factors may include purchase price, rental income, operating expenses, lease terms, tenant credit, vacancy risk, future capital expenses, financing, location and potential appreciation.

A commercial real estate broker can help investors analyze investment properties for sale and understand the market factors affecting a potential acquisition.

NOI stands for Net Operating Income.

It is generally calculated by subtracting a property’s operating expenses from its income before accounting for items such as debt service, income taxes and depreciation.

NOI is commonly used when evaluating the financial performance and value of income-producing commercial real estate. Learn more about how NOI is calculated from Investopedia.

A capitalization rate, commonly called a cap rate, is one measure investors use to evaluate income-producing commercial real estate.

It is generally calculated by dividing a property’s annual net operating income by its purchase price or value.

Cap rates can help compare commercial investment opportunities, but they should not be considered in isolation. Property condition, lease terms, tenant strength, location, financing and future capital needs can all affect an investment. The CCIM Institute’s CI 101 course covers financial analysis tools used in commercial real estate in depth.

Investors should consider both current property performance and the long-term risks and opportunities associated with the asset.

Important factors may include tenant mix, remaining lease terms, rent levels, vacancy, operating expenses, deferred maintenance, future capital requirements, location, financing and potential changes in the surrounding market.

Commercial land should be evaluated based on more than location and purchase price.

Important considerations may include zoning, permitted uses, access, utilities, topography, drainage, easements, development costs, traffic, visibility, surrounding development and municipal requirements.

A commercial real estate broker can help identify commercial land for sale and coordinate with the other professionals needed to evaluate whether a property can support your intended use. The City of Sioux Falls Planning & Development office is also a useful resource for zoning and development questions.

Development feasibility depends on factors such as zoning, utilities, site access, topography, drainage, municipal requirements and the specific needs of your project.

Before purchasing development land, buyers should complete appropriate due diligence and may need to consult with municipalities, engineers, architects, contractors and other professionals to determine whether the site can accommodate the proposed development.

A build-to-suit is a development arrangement in which a commercial property is designed and constructed specifically for a tenant or business.

Depending on the structure of the transaction, the completed property may be leased to the business or purchased by it.

Build-to-suit projects can be useful for businesses with specialized facility, location or operational requirements that cannot easily be accommodated by existing commercial properties.

Lloyd Commercial Real Estate works with a broad range of commercial property types, including:

• Office
• Retail
• Industrial and warehouse
• Commercial land
• Development land
• Investment real estate
• Multifamily
• Single-family Developments
• Special-use properties

Our brokers represent buyers, sellers, tenants and landlords and help clients evaluate opportunities based on their specific business, property and investment objectives.

Lloyd Commercial Real Estate serves clients throughout the region, with licensed real estate operations in South Dakota, Iowa, Minnesota, North Dakota and Nebraska.

Our team combines local market knowledge with the resources and expertise of a full-service real estate company to help businesses, investors and property owners navigate commercial real estate opportunities throughout the region.

Yes. Sioux Falls commercial real estate is a core market for our brokerage team.

We help businesses searching for office space, retail space, industrial and warehouse space, commercial land and other properties for sale or lease throughout Sioux Falls and the surrounding area.

Our brokers can help evaluate available properties based on factors including location, size, price, lease terms, zoning, visibility, accessibility, parking and long-term business needs.

No. We work with clients across a wide range of experience levels and transaction sizes.

That may include a business leasing its first commercial space, an owner purchasing a building for its operations, a property owner preparing to sell, an experienced investor evaluating another acquisition or a developer searching for its next site.

You do not need to be a commercial real estate expert before contacting us. Helping clients understand their options is part of the process.

Lloyd Companies is a full-service commercial real estate brokerage firm representing third-party property owners, landlords, buyers, and tenants across a wide range of transactions. While affiliated Lloyd entities also develop and own real estate, those entities engage our brokerage team through agency and listing agreements, just as our other clients do. These assignments are handled with the same professional standards, processes, and responsibilities as every other client relationship.

What sets Lloyd apart is the firsthand experience found across our affiliated companies in developing, owning, constructing, and managing commercial real estate. We believe this broader perspective makes us better brokers. Our team understands the financial, operational, construction, and long-term ownership considerations behind real estate decisions because we regularly work through these issues with our clients.

Importantly, the brokerage professionals who represent our clients are not general partners, managers, or decision makers for Lloyd-owned properties. This separation allows our brokers to remain focused on their clients’ individual goals and interests.

Our brokerage professionals represent each client in accordance with the applicable agency relationship and brokerage agreement. Client information is kept confidential, and any actual or potential conflict of interest is disclosed and addressed appropriately. Our clients’ objectives come first. Lloyd-owned or affiliated properties are not given preferential treatment and are considered when they align with a client’s needs and goals.

Whether a property is owned by an affiliated Lloyd entity, another local owner, or a national investor, our goal remains the same: to provide honest advice, objective market insight, and diligent representation so our clients can make the best real estate decisions for their businesses and investments.

You can browse Lloyd Commercial Real Estate’s available commercial listings to explore properties for sale and lease in Sioux Falls and throughout the region.

If you have specific requirements, a Lloyd broker can also help identify office, retail, industrial, investment, land and other commercial real estate opportunities based on your location, size, budget and operational needs.

Start by telling us what you are trying to accomplish.

Whether you are looking for commercial space for lease, considering purchasing commercial property, evaluating an investment, preparing to sell or lease a property or exploring development opportunities, our team can help you understand the market and determine the appropriate next steps.