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What Is Key Money?

October 14th, 2021

In some commercial real estate deals, the landlord asks for “key money”.

Basically, there is something already of value in place in the space.

The example in this video is a former restaurant space, what we call a second generation restaurant space.

The landlord here is asking for key money, meaning the new tenant coming in.

What the landlord is looking for is for the new tenant to pay an initial upfront fee, known as key money for keys for this space, and they’re able to use and take advantage of all the infrastructure already in place as you see behind me.

In this example the new tenant will pay for key money plus whatever the rent is for the space.

That is what is known as “key money” in commercial real estate.