Lease Negotiation


Mar 21, 2005
New York
I found a small storefront (900 sq feet), which has an additional 1500 sq feet storage facility, which would work perfect as a warehouse for my stock and shipping of my internet business. The previous guy was paying $800 for the store (plus an average of $300 for common charges), and there was a plumber in the storage part who was only paying $400. Well, the owner now wants $1700 combined (not including common charges), which I don't want to pay. He's being pretty tough to deal with.

My question for those of you who have physical loactions. Did you hire a lawyer to negotiate the lease? If so, were they able to get more favorable terms? What was the lawyer's cost? How many months build out did you get?

Thanks in advance for the replies.
If you use a real estate agent to do your negotiating, you should be able to get the owner to pay for it (out of the commission he's paying his agent.)

It may be that he's doing his own negotiating and he's not going to budge, so you have to either suck it up and pay him what he wants or keep looking. But if he's got his property listed, he's paying them a commission to get his property leased, in which case you can use your own agent and they'll split the commission.
He's is doing his own negotiation. When I told him, I wanted "my lawyer" to spak with him, he tried to get me to hurry by saying "...lots of interest, etc".

I just don't want to pay more than I have to.
Depending on where in New York you are located $1700. is not a lot of money for rent. I'm paying almost double that for 1,000 square feet in a busy upscale town.

My commons fees have gone up almost every year I've been here. Make sure you try to lock in a set fee for the commons fee for a few years.

Also see if there is a provision for a rent increase after the first year. If there is ask him to waive it until the second year.

Aboout 2 months is average for our area for build out time.

Hope it helped.
$10.00/sq.ft. including common charges.
Least expensive small retail space 'round here is twice that. Doesn't mean a whole lot, but I'd love to see prices like that down here. Last time I paid rent it was $15.00/sq.ft. with no lease available and an annual increase of about 20%. That was 1989.

Look at comparables in the area. Talk with other merchants and see what they are paying. Do your homework about the demographics. When you go to get a lease make sure your A$$ is covered. Get a lawyer, even if he doesn't want to use one.
The fact that the owner is increasing the amount is understandable. If the previous tenant had say a five year lease, the value of a new lease would be higher.
You are asking him to take the amount he negotiated 5 years ago today. Would you charge the same for framing as you did 5 years ago.
The real question is can i make money at this location for this amount of rent. As Bob has pointed out it is often better to pay more for a better space than to only look at it from the $$$ point of view.
Also, now is the time to lock in a price for an extension to the lease which would allow you, at your option, to extend the lease for an additional term at a pre-set price. This protects you if, when the term of your current lease expires, you decide you do not want to move. If you don't lock in a price from the onset of the lease, you are at a severe disadvantage when your current lease expires.

An option is just don't have to use it if you don't want to which allows you to either stay at the agreed upon price, move, or renegotiate an extension. A land lord is much more likely to grant an option at the onset of a lease at a very favorable price than when you're over a barrel at the end of the term and you don't want to move.

If a landlord, at the end of your intital term, wants you to move out for a higher rent tenant and you have a locked in option, he'll have to negotiate with you to buy-out your option in order to entice you to move. Often you can get moving expenses, marketing dollars, etc., or re-located to a better spot also owned by the landlord.

Dave Makielski
I might suggest asking the landlord/property manager for the last three years of CAM charges in writing. I am in a strip with seven other businesses and if two spaces are not leased, the other tenants split the bill five ways instead of seven. Also, pay close attention to the amount your landlord bills you. I found out as we started the re-negotiation of our lease that we were overcharged; I would not have known this if not for the very sharp eye of my lawyer. Lesson learned.

I also utilized the resource of another commercial leasing agent who was referred to me and he came into the shop and I picked his brain; he suggested I had the skills to negotiate and gave me pointers on what provisions I might ask for. I also had just attended Marc Bluestone's class on lease negotiations, which I would highly, highly recommend. Again, pertinent information that I used when negotiating. Sure, I asked for more than what I thought I would get in the hopes our landlord would say yes. And I did receive some concessions, namely a reduction in our monthly rent as well as the top portion of the monument sign in front of the strip (which had been vacant for three years!). We immediately ordered a new sign and our foot traffic has increased and we average 8 to 10 new clients a month.

If you use a commercial leasing agent, make sure both agents would even split the commission. When we entered into the first lease (newbies that we were)the leasing agent would not share his commission with the agent we wanted to represent our interests. He told us that he would represent both the landlord and us. It just didn't sound right, how can he take care of both parties? We went ahead with the deal because we really liked the space and knew we could grow the business in this location.

Long story short: ask around for referrals on commercial leasing agents, take Mr. Bluestone's class, take what you learn from this forum and decide if you have the skill set necessary to achieve your goal. If not, then hire someone who has your best interests at heart.