There is a lot to consider before you sign a lease. You should make sure and check the zoning and use of your potential business site with the city before you enter into negotiations.
Tips for finding the right property
Check to see if the property has back taxes or past due water bills. You cannot get a Certificate of Occupancy or any other certificates if the landlord owes taxes or water bills. You can check on back taxes using Onondaga County’s website.
- Talk to current tenants and neighbors to see if the landlord maintains the property well and that they are happy with their lease arrangement.
- Property maintenance and taxes are part of the lease negotiations.
- The prospective tenant should be made aware of all deferred maintenance issues especially those related to life and safety.
- When in doubt, ask. It's better to find out about potential problems before you sign a legally binding lease.
Negotiating your lease
Check out free and low-cost courses and advice at the Small Business Development Center (SBDC).
SBDC Main Office
Mulroy Hall, Onondaga Community College, 4926 Onondaga Rd.
Syrcause, NY 13215
Lease terms to negotiate:
Length of lease: Month to month or over a number of years?
Price per square foot.
What sort of property insurance is included (e.g. fire, flood)?
Are utilities included in the lease price?
Who is responsible for building maintenance and repairs and bringing the building up to code?
Are renovations or modifications needed? These are also called Tenant Improvements (TI)
If so, what are the costs?
Is the building up to code?
Who will be responsible for obtaining the necessary permits and inspections from the City? Tenant improvement costs may be negotiated as part of the lease/rent.
How much rent can increase each year?
What happens if your landlord decides to sell the property, or a neighboring anchor tenant leaves?
Options to sublet the space, transfer the lease to a new business owner, or terminate the lease.
Consider the time it will take to get your business up and running
If you're planning to make renovations, serve alcohol, or conduct other activities that require a license or permit, keep in mind that those processes require additional approvals, and there may be delays that are out of your control. Try to build flexibility into your lease in case it takes longer than you thought it would to start bringing in paying customers.
Draft and Sign the Lease
Landlords often have a lease template they use and will fill it in with the terms you agree on. You can meet with a person at the SBDC who can help you review the quality and financial commitment of your lease.
Professionals who can help
It's always a good idea to consult with a professional or an experienced mentor who can help make sure you're considering all of the angles. Understand the different players in the commercial real estate world and their roles: Commercial brokers, property managers, leasing managers, and property insurance agents.
Commercial brokers are real estate agents for commercial property. They represent you in lease negotiations, and work on commission. A professional real estate broker will ensure your financial and business interests are protected. They can help you understand the lease terms, such as who will be responsible for repairs, taxes, common area expenses, etc.
Brokers are not allowed, by law, to render legal advice. A lease is a legal contract. It is actually NOT illegal in the state of NY for a broker to represent BOTH the landlord and the tenant simultaneously in the negotiation process.
Beware of unscrupulous brokers. Brokers only get paid if and when a lease is signed. They may push you into making a deal that does not serve you well, just so the broker can get a commission. One way to avoid this is to choose a different commercial broker than the one representing the landlord.
Avoid using a residential real estate agent to negotiate a commercial lease for you. Successful negotiation can be stressful. A commercial real estate broker negotiates for a living, and can provide a buffer between the sometimes rocky process and the client. negotiation can be complex, and it is helpful to have an advocate on your side.
Real Estate Lawyer
Retail leases are detailed, complex legal documents. Having a leasing specialist look over your lease will protect you. They can help with the lease review, interpretation, and negotiation. Leases can be confusing and full of jargon that often hard to understand. A good real estate lawyer can read and interpret these legal documents, and help negotiate lease clauses that protect the financial and business interests of the client.