HEB center restrictions. We have found a space for lease that we would love to take but heb has food business restrictions.
Good morning all, I’m not sure if this is the proper sub to post this question in but here it goes. I’m looking at a space that’s for lease in an HEB shopping center. We were granted the lease but told if HEB doesn’t like what we are doing there (meal prep) they could send us a 30 day notice to vacate. My question is, how likely is this? There are other food businesses in the center but the agent cannot tell me how they are there considering the restrictions. The rent is cheap, the space is nice but not sure it’s worth the risk. The guy that leased this prior used the space as a prep kitchen for several years and prior to that was a dine in food business. I’m not sure is HEB really cares or pays attention to these things but would love some insight.
[{"id": "iynhgqd", "text": "Assume the worst case and how big of an issue that would be for you. If the kitchen and everything is in place and you aren\u2019t having to spend significant money to get up and running, then maybe it\u2019s worth it.\n\nI would guess it\u2019s unlikely they care/notice, but don\u2019t bet on that with your business if you can\u2019t afford the result if you are served with notice to vacate.", "replies": [{"id": "iynhxdb", "text": "Our cost to become operational in that space is very minimal (under 10k) and we are keeping our original kitchen space as well to serve as a commissary kitchen. Worst case, we will move back if we are forced to vacate. It would serve more as an inconvenience to my customers having to shift where they pickup again.", "replies": [], "depth": 2}], "depth": 1}, {"id": "iynpt3p", "text": "HEB **absolutely does** care and pay attention to these things. Have you reviewed the lease terms to see if your intended use is explicitly excluded?", "replies": [], "depth": 1}, {"id": "iynya8i", "text": "You should not sign this without getting written approval from HEB", "replies": [], "depth": 1}, {"id": "iypeqs8", "text": "HEB won't lease to you if they don't approve your use. Have an attorney review your lease. They are fair.", "replies": [], "depth": 1}, {"id": "iypf0zc", "text": "Who said \"if they don't like what you are doing\" aka your Use? If it was your broker, are they a CRE broker or a Realtor?", "replies": [], "depth": 1}, {"id": "iyr8mvu", "text": "I am somewhat familiar with HEB leases and can tell you that 1) they will notice and 2) your business is likely a prohibited use. Looking at your post history, it looks like you run a meal prep/meals to go business. Generally, HEB leases will specifically prohibit a meals to go business in the same shopping center or Centers covered under the same REA. HEB\u2019s remedy would be to default the owner of the shopping center which may mean they will only pay 50% of base rent. This could mean several hundred thousand dollars in lost rent for the owner, so take a guess at who\u2019s gonna have to vacate. You should try to obtain a copy of HEBs lease to determine what uses are prohibited", "replies": [{"id": "iyraktk", "text": "I am in the meal prep business and was hoping one thing that would set me apart would be that 100% of my sales are done online however, I would not necessarily want to turn away in store sales. I have reached out to the individual listed as the regional shopping center development coordinator to ask these questions directly, hopefully I hear back. The restrictions list does seem to be very strict but not followed or possibly granted situational approval? These centers prohibit food businesses but there are Subway sandwich businesses in them along with other food businesses both dine-in and carry out and even prohibits nail salons but again, there are operational nail salons in these centers. That\u2019s why I was thinking it potentially wouldn\u2019t be as big of an issue as it seems. I appear to be wrong based on some of the responses here.", "replies": [{"id": "iyrd58c", "text": "I\u2019d have to check a few leases later but there are carve outs for the things you mentioned. In fact, Subway/Quiznos are often specifically named as carve outs. Regarding a \u201csituational approval\u201d, it\u2019s possible but generally comes at a cost.", "replies": [{"id": "iyre7fh", "text": "I really appreciate it, helps more than you know. Hopefully there can be some deal worked out to get us in this space. I won\u2019t hold my breath on it but will definitely be asking the right questions to make sure I don\u2019t step on any toes.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iz3847l", "text": "I did hear back from the Center coordinator and they said my moving in would cause issues so I\u2019ve decided to not risk it.", "replies": [], "depth": 1}]