Should/can I wait on signing commercial lease (10-year/bakery)
Before the pandemic, I was iterating with an attorney and potential landlord on a commercial lease for my future bakery (first retail location). It was a few weeks away from "almost there", and then the pandemic was declared. 

I have now been trying to "slow-roll" any steps I can to slow down the process, so I can have more data before signing this lease. This is a much scarier prospect now versus 1.5 months ago. It does feel, however, that the landlord has a more relaxed attitude about the pandemic/economy combined with what feels like an anciness to have the lease done. (Argubly, probably wants to start architectural design of the space.)

**So my question: do you think it would be reasonable to ask to wait a few months before continuing? Or how would you suggest I proceed? Make sense I'm wanting to now wait, right?**
[{"id": "fmjk690", "text": "I am the landlord in a very similar situation.  i would love to get the lease signed and a new tenant making steps toward paying rent, but if i was in your shoes there is no way i would sign until you know where the bottom is on the downturn.  Not sure where you are located or how tough it is to find a spot in the submarket you are in etc etc but on just a very basic level i think the risk of others taking the space is minimal and starting new business is challenging even under normal circumstances.", "replies": [{"id": "fmjnxtq", "text": "Thank you so, so much for responding and sharing this. It is immensly helpful, especially since you are on the other side of the table. And you are right - \"starting a new business is challanging even under normal circumstances\". I forget this sometimes and get neurotic that I am going to \"miss the boat\". \n\nWhen you say to look for bottom on the downturn - you thinking pandemic and/or the market (economy)? \n\nAny strategies on how to approach landlord (phone/email, what to say?)", "replies": [{"id": "fmkxk5y", "text": "whatever happens with virus, economy will be a longer slower recovery.  comments below point out correctly, the economics of your deal should probably improve a bit as well, as they should given the prior vs new economic situation.  I agree with comments about shorter term or at least limiting personal guarantee period.\n\nas for email vs phone, i would just be honest.  too much uncertainty, I don't want to proceed until i have confidence that there will be customers with money when the doors open.  If you love this location, tell him you want to just put on hold, but I suspect you would be much better off to fully disengage so you can negotiate a more appropriate deal later on.", "replies": [{"id": "fmltcel", "text": "Thank you for your input on this.\n\nUgghh. Kinda hurts the money I've spent on the attorney for the damn lease. And hopes.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fmjtukt", "text": "Ask for an extension to be signed. Wait for awhile see if you signed your life away. 10 year is a long time.... big commitment.", "replies": [{"id": "fmk4fi1", "text": "Never do 10 on a first venture!!!", "replies": [{"id": "fmluhwf", "text": "I tried to push for 5 - but landlord said \"it's built for your bakery, and if you can make it 5, I want you in for 10\".", "replies": [{"id": "fmn2p2b", "text": "So do a 5 with a 5 yrs renewal option. Or at least limit your guarantee to 3 years! The LL and broker want a 10 yr deal. You should pay a lil more psf, and push hard for 5. Cite the current climate and say you will walk. I'm certain other LLs are going to start getting hungry.", "replies": [{"id": "fmn5jhw", "text": "OKay - thank you for the input. Any suggestions on how to approximate a reasonable increase in the psf? (I.e. if he says yes, how to know if he is going overboard on increasing rate?)", "replies": [{"id": "fmn6393", "text": "Well, you really shouldnt have too under the current conditions. You really have a lot more bargaining power now. But if you were trying to price out changes, you should have a broker run some numbers. Do you have a current LOI I can review? Also, I'm not a broker, but do have a MRE.", "replies": [{"id": "fmn78da", "text": "Thanks for the offer - that is very kind. They didn't do an LOI (not sure their rationale). \n\nHow long would you hypothesize I have the bargaining power? (I.e. do I bargain now, or wait to kinda see if economy is returning, still bargain?)\n\nI kinda fear the broker doesn't know how to run numbers. I'll try.", "replies": [{"id": "fmncykg", "text": "Everyone here seems to be mincing words so I'll just say it -- a retail landlord in an environment where nobody can go outside and a deepening recession? You have the LL over a fucking barrel!!!!!\n \nYou are the one in the position of power and you're acting like *they* might walk away from the deal if you upset them.\n \nAlso, get a new broker who actually cares about you and not their own wallet.", "replies": [{"id": "fmndf5e", "text": "Good reality check here. Can you help me out with these two questions:\n\n1) How to pace this? (Negotiate now or wait until things look a little better?)\n\n2) If I get a new broker - do both make commission? I thought the one I was working with said something like \"even if I proceed alone, they still get commission since I originailly used them\"", "replies": [{"id": "fmnjvyg", "text": "So full disclosure, I don't work in brokerage, but I do sit on the deal terms data side of things and speak to brokers everyday (sorry if that's vague haha).\n \nI also I don't know the laws in your area or what you've already agreed to, so I wouldn't trust my opinion on either of those questions.\n  \nWhat I *do* know is that you should absolutely get another opinion (maybe more than just one other).\n \nEven if your current broker is right about still splitting the commission, in this environment, any tenant rep (retail or otherwise) who doesn't take your call right now and hear you out is an absolute moron.", "replies": [], "depth": 10}], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fmk9e7j", "text": "10 years? Hopefully no personal guarantees?\n\nNegotiate that thing down, but probably best to hit pause. Who is going to buy your product right now? It might be June before restaurants reopen, and the economy will be in shambles by then. This has the potential to make the last recession look tame in comparison.\n\nThe bottom may be a year or two out, seriously.\n\nYou may find space for half of the current ask and in way more favorable terms for the tenant. There are so many unknowns right now.\n\nIf you for some reason do desire to move forward remove all personal guarantees. Only have the bakery LLC/Corp liable for the lease. That way if it doesn\u2019t work you can still keep yourself in tact. And negotiate down to five years, with one or two 5-year options.", "replies": [{"id": "fmkj4sm", "text": "Any small time lease (newer business) is going to have a personal guarantee, trying to get that mot in there isnt very realistic. \n\nI agree he should wait.", "replies": [{"id": "fml032x", "text": "Absolutely it is common, but we are in unprecedented times. I would surmise very few people are signing leases for spaces like the one OP is looking at right now. He/she has all the leverage, at least so it seems.\n\nDo a limited guarantee, limit it to maybe half the lease term?.", "replies": [{"id": "fmluaat", "text": "3-year personal guarantee, 10-year LLC on lease term before pandemic. So big question now - wait, or use this time to negotiate lease to very good terms?", "replies": [], "depth": 4}], "depth": 3}, {"id": "fmlu50c", "text": "OK - that makes me feel better. To you think a build-out designed for my bakery warrants a 3-year personal guarantee and 10-year LLC lease? Push for shorter on either?\n\nFor a space meant to be handed over Jan/Feb 2021 - how long to wait? Hard to say?", "replies": [{"id": "fmlx37g", "text": "It's up to you if you want to wait. How effected would your business be during this?\n\n10 year lease is common if they are building out the space to your specifications. \n\nAnd dont get me wrong, if you can get the leased signed with no personal guarantee then you should. I just dont see many happen that way with new businesses. \n\nGood luck!", "replies": [{"id": "fmly9ps", "text": "&gt;OK - I understand. It is hard to say how effected - right now I would not want a bakery open at all. But since the opening date would be 2021 - perhaps that's okay.", "replies": [{"id": "fmlyimh", "text": "Yep hard to say if this recession will last 6 months or 3 years. Rolling the dice kind of in my opinion.", "replies": [], "depth": 6}, {"id": "fmmbjnw", "text": "Then don\u2019t do it.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "fmltz16", "text": "This is incredibly helpful.  10-year with LLC on lease, 3-year personal guarantee. (He originally wanted 10-year with me and spouse on lease.) I originally *pushed* for 5 years with two 5-year options. The landlord's \"logic\" was that since they would be building the space out suited to my bakery, that 10 years was fair. \n\nThe place has to be built from dirt - so wouldn't be up until Jan/Feb 2021. How long you think to hit pause?\n\nI'm a bit frustrated because I have been paying for a top attorney to review this lease. How come that aren't pushing for 5-year and removing personal guarantees and advising me to pause?", "replies": [{"id": "fmma1uf", "text": "They want their money.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fmkkrv6", "text": "Wait ...do not sign a lease . In a couple months landlords will be begging people to sign leases . You should be able to get a better too . Economy is in the tanks . \nStarting out , a 3 yr or max 5 yr is the way to go . Be patient.", "replies": [{"id": "fmlud28", "text": "This is feeling very validating hearing your and other's input - thank you.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fmlvv80", "text": "Thank you all so so much for your responses. I feel very very relieved that so many were on the same page. I kinda responded to each of you with details  and similar questions - but I will put them all here for a fresh thread.\n\n**More Details**\n\nFirst commercial space (operated home bakery /sold a farmers markets for 2 years)\n\nWanted 5-year lease, landlord (before pandemic) pushed for 10-year due to \"space being developed for my bakery\" and \"if you can make it 5, I want you for 10\". \n\nOriginally wanted me/my spouse on 10-year lease, got negotiated to 10-year with LLC on lease, with 3-year personal guarantee.\n\nSpace was to be handed over (is dirt right now) end of 2020, like Feb 2021.\n\nStressed why attorney hasn't been advising the same as the consensus here\n\n**Questions (new), for the willing**\n\n1. Sounds like many say to wait - which I like. Any ideas of indicators of when I should proceed? \n2. Best to wait instead of using this downturn to negotiate? (Even if I wait, can probably still use downturn to negotiate?)\n3. Should I consider new attorney? He is real old, highest paid. Lots of experience in commercial real estate - but I don't think much at all in food spaces.\n4. Some mentioned asking for an extension, some mentioned asking to wait, some mentioned disengaging. I think ask to wait/extension is same. Brief idea of wording in the written extension? Extension versus disengaging?\n5. Kinda wasn't thrilled with broker I used (check out past post, plus I found the only two spaces I've considered, plus they have NO experience like this - their business is mainly appraisals). Am I stuck with this one if I move on? How to proceed? They get commission no matter what? (Want to end professionally if so.)\n\nI pour my heart out with thanks to you for reading through all that and already chiming in.", "replies": [{"id": "fmrdjyt", "text": "Smart to be so careful. Wishing the best for you!", "replies": [], "depth": 2}, {"id": "fn1nc92", "text": "A little late but not seeing answers to this last one so here's my 2c. Obviously I don't know your market, business plan etc etc. Some of these answers obv reflect my opinion that things will get worse (economically).\n\n1. Nice answer: I would wait at least until June, see how things are progressing, are restaurants open again etc. Real answer: Push off this plan by a year. We are going to go through tremendous ups and downs the rest of 2020. No one knows how this will shake out economically. Preserve your capital ($$).\n2. Yes, wait. You could get a small concession now or you could get more later.   Is there a bakery or restaurant in the area that you would like to take over their space if they fail? That might become a real option for you. Make a list of spaces, check in on them in a few months. You might actually be able to help someone get out of a bad spot, win win, etc. Also, have you ordered your bakery equipment? I hope no. Better believe there will be a ton of equipment auctions this fall.\n3. I'd like to think your CRE attorney is being paid by the hour and will look to protect your interests here, not just get the lease done and move on. If he is downplaying all of this, however, yes - move on. Please find an attorney who reps tenants in restaurant leases, they do exist.\n4. You've probably already written this but: \"Unfortunately I have to pause all plans while we see how this unprecedented event develops. This environment is too uncertain to make long-term commitments. Let's touch base in xx weeks (4?) as we see how things develop.\" Just keep pushing them out until you feel comfortable one way or the other. Understanding that it will push out your start date next year.\n5. You'd have to read the broker agreement you signed re: duration, exits, etc. You might be able to say you're shifting gears and negotiate an exit to the agreement where they get their commission for the current deal if you sign with that group (or anything they've already showed you), but nothing if they haven't showed it to you. Or you may be stuck. (Edited to add: don't take any shit from your broker about owing them a commission if you back out of this lease at this point. I'll probably get downvotes for that but that's life.)\n\nI just want to emphasize this seems like a really, really bad time to be committing to a new build for a bakery or any restaurant/food-service type business. But I'm very glad for you that you're pre-signature and don't have a grand opening scheduled for April etc. Your sunk costs are low.\n\nBest of luck to you.", "replies": [{"id": "fn41otc", "text": "I wish I could relay the gratitude I have felt seeing, reading, and thinking about your response. You spent a good amount of time and thought on it - and I just feel so incredibly appreciative. It has been very, very helpful.\n\n1) I appreciate your honesty on what you are hypothesizing. I think I just took my first deep breath filled with \"I may not be opening a bakery for a couple years\". (I.e. moving past the denial stage.) \n\n2) You are right - I haven't bought any bakery equipment (other than the stuff I use for my home bakery). You are also probably right about the equipment auctions and, sadly, other places potentially opening up for lease.\n\n3) I will look around for a restaurant attorney. This one acted as if he had the requisite experience, but I am thinking it was more of a \"one lease fits all\" type. \n\n4) Thank you very much for how to word the pause. I hadn't already written it. I had communicated via phone call that I will be pausing. The landlord is highly downplaying this \"the economy isn't hurt at all\". I think I have to adopt the \"be willing to walk away\" attitude. \n\n5) There was no signed agreement - but they described in AL one is not needed - that services are \"locked in\" once work began. I'm thinking I'll just bear with this one - because I honestly don't know how to find one that would be better. (??) I didn't even think the broker would ask for commission if I back out. Good to know it is possible.\n\nI am glad I was pre-signature. If this pandemic came two weeks later, I would have been signed. I would have been panicking.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]