Building Lease Question

Here’s my situation. I’m getting ready to open my third location. I have a building picked out that I want to lease. The rent will be $1900 a month. I talked to the company today that owns the building and they want $1900 for the first month’s rent and $1900 for security deposit right when I sign the lease. For me to get the place up and running, a little build out will be necessary. I have to install a hood and ansul system, clean, paint, run gas lines, run some more electrical lines, etc. I’m probably looking at around a month’s worth of work to get the place ready to open. My problem is that by the time I can even get my first order, I’ll have already spent $5700 between rent and security deposit. I’m going to call back tomorrow and try to negotiate a little. Should I make it a requisite that my rent doesn’t start until I’m open for business? I don’t know if they will go for this. The way I look at it is that if I don’t lease this building, it might sit empty for a while and they won’t be getting any rent at all for who knows how many months. I’m going to be signing a 3 year lease and plan on staying their for a long time. I would love to hear some of your guys’ experiences with new leases on buildings. Did you start paying rent the first day you stepped foot in the building even before you were able to get the place ready for business? With my other two locations I was able to step right in and get the buildings ready withing a couple of weeks since they were preexisting pizza shops. I’m worried that this building could take more than a month to get it ready and I’ll end up having to pay 2 months rent.

We ALWAYS negotiate 2-3 months of “free rent” up front for our new stores. This is common practice - especially if you are having to do any build-out.

If you are signing a 3 year lease, you shouldn’t have ANY problem at all getting this. Are they providing any cash to help you do your build-out? At the very least they should provide you with some free rent to offset some or all of your buildout costs.

I ABSOLUTELY agree with Registered Guest on this one. If they don’t go for the 3 months free rent you should definitely be able to negotiate first payment due when you get certificate of occupancy from the city. Also, as stated in the previous post, have your landlord commit to some of the build out costs. Even if the amount of build out is added to the payments of the lease, at least it will free up some opening capital. -J_r0kk

your key statement “a little build-out” - most landlords understand that and a free months rent is not out of the question to ask…any longer for build out is a negotiable point…

instead of asking for “free” you might consider a sliding scale for rent payments, will you ramp up sales…in effect still getting your free month’s rent

Ask for 2-3 months for buildout. shouldn’t be any problem with the landlord.