Lease Prices & Negotiations

[Dice]

We negotiated triple net to gross. They tried to pull a fast one, and tried to re enable the tipple net into the lease document. Once you negotiate the lease, don't assume that they are honest. Take it home, READ IT, negotiate anything you don't like the next day.

I'm sure others can pipe in and add things to look out for. Here is some of the things we ran into on our last lease negotiation:

- Landlord tried to have the right to move us at OUR expense. (Made it their expense)
- No Signage rights. (Got Rights)
- Triple Net vs Gross (Got Gross)
- AC/Heating Contract Required on 26 year old units (got them to replace)
- Didn't want to do any work on inside said it was move in condition (Got them to spend 4k on Paint, Carpet, flooring)
- Toilets didn't work properly (got them to replace)
- Wanted 5 years (we signed 3 years with option to void after 2, we are growing)

Before you sign anything make sure you inspect everything. One of the things we forgot about was fire code. We had to install fire extinguishers and fix back door lighting and locks at our cost. Most Local Cites have check lists.

 

[CheapVehicleWrap]

I'm not saying everywhere in NJ has a NNN lease. But there are allot. I don't pay NNN but go next door into another industrial complex and you will not only HAVE a NNN lease but your lease agreement will about the size of the old phone books... remember those?

Another VERY important thing that comes to mind. Make sure you measure the area in question. I've seen HORROR stories! Some misrepresent what they have by mistake and/or on purpose.

New Jersey hasn't come to the VERY negotiable point on commercial real estate yet. There's a building just across the streeet from me that rents for 10k a month, been empty for 2 years. A MAJOR highway here is becoming extinct of all sizes of stores that have been around for decades. It's starting to look like just like only stations as I once predicted would happen. I'm 9 miles from Manhattan where most people would think of NJ as. The 'Bada Bing' is 3 miles from me and they own another club right up the street. And you know things are bad when the strip clubs aren't even making it as many are posted on craigslist.

We went from having THE worst landlord to having the BEST luckily.

 

[B Snyder]

New Jersey hasn't come to the VERY negotiable point on commercial real estate yet.

I have no idea about your area but central NJ is full of empty commercial properties who's owners would love to at least have someone interested in their properties that they could negotiate with.

 

[CheapVehicleWrap]

Agreed, I am only speaking of northern NJ... one if not THE most expensive places on earth.

But, how flexible are they really if the places are still empty?

 

[B Snyder]

Its simply a matter of there being way more supply than demand. There just isn't very much interest in commercial real estate right now.

 

[CheapVehicleWrap]

But i do know several that are interested that can't find what they want for what they want to pay.

I knew a guy who leased a gas station. 10k a month for something like 15+ years. Only had the station so he could have the service bays.

Gas company says, they want 16k a month from now on. He bolts, buys a house with an ajacent piece of empty land right down the street and builds a garage.

Months go by and the gas company says, ok 10k a month if you move back. He replied that his new mortgage was less and he was already setup. No thanks. Station is still empty.

Greed always has a way of catching up to you.

 

[pointjockey]

Do you expect to gain an additional 5 to 7 K per month from walk-in traffic that you will need to generate to cover the lease payments and other costs involved?

Personally if I had my shop at home like you, I'd hire additional sales staff to drum up business. Our shop is located on a high traffic intersection. About 40K cars per day , maybe more since we moved in. No sign shop within 10 miles in any direction. I'm lucky to have 3 people a day walk in. 99% of our business is B2B, commercial,national accounts, etc. We go to them. The only reason we have a retail front is due to a requirement in or FRAN Agreement.

Help Obama out with the unemployment issue and hire a nice looking sales rep. Try it for 3-6 months, if you cant generate new sales, then rent a space. In just about every State right now you can actually hire staff and the Department of Labor will pay you during a training period. Call your State Labor Department to see what programs they have for your State.

I would seriously consider something like this before I signed a lease on a building to take care of walk-up traffic in this economy.

 

[cartoad]

Before you sign anything make sure you inspect everything. One of the things we forgot about was fire code. We had to install fire extinguishers and fix back door lighting and locks at our cost. Most Local Cites have check lists.

Big plus on that, before you sign the lease check everything about the building you may be responsible for after you sign. Check the doors, those commercial doors can be expensive to repair. If possible do not take any responsiblility for the HVAC, ours is old and patched up, and if it fails we will get the honor of buying an new one per our lease. Another item to check is the parking. Make sure you have adaquate parking in front of your store and you do not have a period or periods during the day where you have no parking. We have a Weight Watchers storefront, and they meet several times a day, when they do, there is no parking in the complex.
One other thought is to check the lights, when we moved in we found out that the previous tenant had either removed or allowed over 50% of the lamps to burn out. So if we ever lease another space I will have the owner relamp prior to our moving in, and make sure the fixtures are up to date.
Good luck,