Your dream of business ownership is starting to look like a reality. You have a solid business plan, a great product or service, and the bank just green-lighted your funding plan. The next step is to actually get into a space to call your own. These days, many retail spaces are going for bargain rates. Of course, prime locations are still commanding a premium; but, location is an important facet of your business. Without a great location in a high traffic area of Southern California’s Baldwin Park, you might not have the traffic to support your business model. When you have narrowed the list down to a few great spots, here are a few things to know before putting your John Hancock on any lease for retail space:
Be sure to get an inspection: most shopping center leases require you to accept the space “as is,” which in most cases is fine. However, problems such as drywall mold, below code electrical wiring or facilities that are not compliant with federal and state Americans with Disabilities Act (ADA), requirements might not be immediately apparent. Good Tip: bring in a professional!
Review previous tax and utility bills: generally shopping center leases require the tenant to pay a percentage of the property taxes and utility bills on top of the monthly base rent. It is a good idea to ask to review the prior tenant’s triple net arrangement to help your budgeting process.
Have the landlord notify you of impending default: many retail leases outline a default if the rent payment is five to ten days beyond the due date. Because payments get lost or re-routed, be sure to have the landlord notify you if he or she does not receive a payment. Good Tip: Get this in writing!
When leasing a retail space, the devil is certainly in the details. Most upstanding and on-the-level shopping center landlords will have no problem with any of these requests. Remember to scope out the anchor tenants. If there are highly recognized brand names in the center, chances are high that you have hit a winner location!