Negotiating a retail Lease

[GamesNgo]

Has anyone ever done this? did you guys hire a Real Estate Attorney to help negotiate the lease?

not sure i'll get much feedback on this. thought i'll try.

Price per square foot
Tennant improvement allowances
Duration of lease
Renewal Options
etc.

[jasaunders]

If your only question is has anyone ever done this, the answer is yes. Do you have any other questions?

[2gould]

Short answer - get an attorney. Retail leases can be very complicated and have provisions that could prove very onerous, i.e. CAM charges.
Sure, you could find a sample online for free but the cost of the attorney will not result from drafting of the Lease, they will probably use one of their existing forms and tweak it; however, the real value is in the ability of the attorney to explain certain provisions and their effect on your business.
Hope that helps.

[ltressel]

Has anyone ever done this? did you guys hire a Real Estate Attorney to help negotiate the lease?

not sure i'll get much feedback on this. thought i'll try.

Price per square foot
Tennant improvement allowances
Duration of lease
Renewal Options
etc.

I was in Texas a little after Thanksgiving and I met with a few leasing agents there for restaurant space. I was able to negotiate all but the square footage. All you need is be stern on your terms. If what you are afraid of is reading through the lease docs-get an attorney. If it's all for negotiating purposes only, you can do that yourself.


Here's some things I was able to negotiate-

5 months (free) 3 months modification, 2 months post opening
.70/ sq ft. from 1.50

Lease duration 2 years

Always know that there's always room for negotiation. They want your business and they will work with you. Know what you want from the beginning but let them dish out their terms first.

Good luck,

LT

[KKoher]

Hey..which mall are you negotiating with? We are with Simon....Check and see if you can find the malls quarter and divedends report. We were able to find one for the Simon malls in Florida, and on it shows what the average is per sq. ft. for Fl regional malls. Make sure your not paying over the average, and see what else you can get out of them. They want and need your business, and are always willing to negotiate. Everything in retail is negotiable... if anyone tells you otherwise,then find another company to deal with. You can always find someone willing to negotiate. Also, do your homework first. Find other competing malls in the area. Forinstance, if you are looking into opening a store in a Simon mall, find out what the closest Westfield mall will give you per sq. ft...or whoever the closest competetor is. Go into your meeting with your leasing agent knowing what you can get at another mall...

[BusinessAdviser]

Reiterating what others have said, EVERYTHING is negotiable.

The building owner will have its own form lease for you to sign. What kinds of provisions do you think that lease will contain? Provisions most beneficial for you, the lessee? I think not.

This is why it would be most advantageous to have someone familiar with such contracts, whether it be an attorney or some other leasing agent, help you review the contract and negotiate its terms. The amount you pay that person will be small relative to what you will gain in the long-run.

Personally, I prefer to have an attorney review things over a real estate agent because an attorney doesn't have quite the conflict of interest of a real estate agent and can sometimes be less expensive. (The conflict of interest, of course, lies in the fact that a buyer's agent is a duty to help you negotiate a deal at the lowest price, but the commission-based system awards the agent less money for doing so. As a result, the agent has a DISincentive to negotiate a lower price.)

[GamesNgo]

Thanks for the advice!

The problem I’m having with the leasing agreement is the 5 year Personal Guarantee they wants me to sign, putting up all my assets just incase the business fails.

I have an attorney helping me write up a buy-out clause. Ill keeps everyone posted.

Again thank you!

Reiterating what others have said, EVERYTHING is negotiable.

The building owner will have its own form lease for you to sign. What kinds of provisions do you think that lease will contain? Provisions most beneficial for you, the lessee? I think not.

This is why it would be most advantageous to have someone familiar with such contracts, whether it be an attorney or some other leasing agent, help you review the contract and negotiate its terms. The amount you pay that person will be small relative to what you will gain in the long-run.

Personally, I prefer to have an attorney review things over a real estate agent because an attorney doesn't have quite the conflict of interest of a real estate agent and can sometimes be less expensive. (The conflict of interest, of course, lies in the fact that a buyer's agent is a duty to help you negotiate a deal at the lowest price, but the commission-based system awards the agent less money for doing so. As a result, the agent has a DISincentive to negotiate a lower price.)

[ltressel]

Just curious-what business are your trying to open? Glad you got an attorney to help you out.


LT

[BusinessAdviser]

Personal guarantees are a bummer, but they are very common where you do not have a track record or collateral to put up against a loan.

[paul2145r]

If you are experienced with reading contracts, feel free to handle everything yourself. Don't EVER get strong-armed into signing. They will often tell you that there are thirty other people that will be looking into the property that same day... If that were true, and it was such a 'great deal', then the property would be rented out already!

If they give you no leeway, just walk away- that's my personal motto on the topic. Rental agreements will often be very generalized and greatly biased towards the landlord (of course). More often than not, landlords and property managers are simply trying to protect themselves and their interests, but you will come across a few that will be down-right crooked.

Verbal Agreements don't mean much of anything in the Real Estate world, so make sure that you get EVERYTHING on paper. For example- the last office property that we rented had a strict policy concerning maximum occupancy. In order to ensure that this policy was never broken (and that no other situations pertaining to this topic ever came up), I made sure that the property manager wrote-in a new clause. It pretty much stated that the fish, crabs, and invertebrates inside of the saltwater fish-tank we were having installed would not count towards the occupancy. It may seem foolish, but even something that simple could cause you undue stress in the future.

[paul2145r]

If you are experienced with reading contracts, feel free to handle everything yourself. Don't EVER get strong-armed into signing. They will often tell you that there are thirty other people that will be looking into the property that same day... If that were true, and it was such a 'great deal', then the property would be rented out already!

If they give you no leeway, just walk away- that's my personal motto on the topic. Rental agreements will often be very generalized and greatly biased towards the landlord (of course). More often than not, landlords and property managers are simply trying to protect themselves and their interests, but you will come across a few that will be down-right crooked.

Verbal Agreements don't mean much of anything in the Real Estate world, so make sure that you get EVERYTHING on paper. For example- the last office property that we rented had a strict policy concerning maximum occupancy. In order to ensure that this policy was never broken (and that no other situations pertaining to this topic ever came up), I made sure that the property manager wrote-in a new clause. It pretty much stated that the fish, crabs, and invertebrates inside of the saltwater fish-tank we were having installed would not count towards the occupancy. It may seem foolish, but even something that simple could cause you undue stress in the future.

[Gr-Andy]

You dont have to have an attorney if you have a brain. Have a real estate broker with good experience and they are much cheaper.

[BusinessAdviser]

Also, understand that all contracts are negotiable. Even if they pull out a "standard contract," it is negotiable. The key is to have someone, either yourself or another, review the contract who is capable of identifying each of the issues in the contract.