when is right time to re-negotiate a commercial lease for a restaurant
tenant here, 20 years at same location, but new landlord, My lease expires in 1 year. no option at the moment. Landord now not flexibe much, broker considers him self hard negotiator. They want to contact me in 6 months. Advice please. SO CA, resturant.
[{"id": "e7eyt01", "text": "It would take you about 18 months if you moved to set up a new spot. Talk to them now. If your existing lease say nothing about options, you are ducked. Expect your rent to rise by a lot ", "replies": [{"id": "e7ezvg5", "text": "Concur. The earlier the better. ", "replies": [{"id": "e7f0xnw", "text": "thanks!", "replies": [{"id": "e7f0zgb", "text": "how do i reply to their \"we usually do 3 month before, but we asked our broker to contact you in 6 mo\"", "replies": [{"id": "e7f7x50", "text": "\"I need to get a new lease with agreeable terms approximately a year ago.  Since we can't go backwards, this week seems like a good time to renegotiate while I explore all of my options\".  Remind them that you're not asking a question if need be.  I've had a long day, so maybe soften it up a little bit but stand your ground.  It's your business and your livelihood whereas your space is likely just a slice of their portfolio. ", "replies": [{"id": "e7fqdu3", "text": "Its actually good advice, considering their stance.  And yes, i feel we went from the old cranky lady owner who just wanted her money ( and had full occupancy ), to a new agent of owner who could not care less as if we leave they will still have 90% occupancy.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "e7f4gax", "text": "You should call a couple of brokers in the area who have experience with restaurants. The good ones will talk to you and give you some advice / ideas based on your market.  You will also want to know what market rent is so that you know you\u2019re getting a fair deal if you do end up renewing. Also have a RE attorney look at your lease to determine what the holdover clause is just in case!  ", "replies": [{"id": "e7fqke1", "text": "I believe we are paying close to top market rate. Wanted better terms, but they are determined to raise my cost trough changes like passing the water cost and going from rent only to triple\nn charges", "replies": [], "depth": 2}], "depth": 1}, {"id": "e7f64re", "text": "Be prepared to pay anywhere from 6 to 8% of your gross revenue in rent.  Show them the numbers.  If they won\u2019t do a lease where it makes sense for you be prepared to walk.  If they let you then maybe your business should be at a cheaper piece of real estate anyways. ", "replies": [{"id": "e7fqumi", "text": "Lol sorry for admitimg my stupidity, but we are currently paying close to 14% of our gross.\n", "replies": [{"id": "e7g4aol", "text": "That\u2019s already a pretty unhealthy rent to sales ratio.  All your margins are going up in smoke as rent.  ", "replies": [{"id": "e7gbrj6", "text": "Will defenitely use to try get better terms. we occupy two units and we are requesting to cut to one, but the first talk i had with broker he \"indicated\" that Landlord was \"set\" on keepingbthe units together an as a restaurant. Which is not true because if we leave the place has to be all re-do.\nAll equipment is \"Granfather-in\" and would noy fly on another reataurant.", "replies": [{"id": "e7gc0vq", "text": "Here\u2019s what you need to do.  Find a local commercial real estate retail specialist.  Tell them you are considering moving locations, that your lease is about to expire and you would consider renewing but the landlords agent hasn\u2019t been the easiest to deal with.  Tell him if the rent to sales made sense then you could extend.  Let him do the negotiating.  Your representative will typically be paid by the seller out of commissions to their representative.  If they can\u2019t figure out a fair deal, then maybe you find a different location. ", "replies": [{"id": "e7gfo8w", "text": "thanks!", "replies": [], "depth": 6}, {"id": "e7hbimi", "text": "Goodtimes is spot on. You are in trouble if you're paying double digits in rent for an established restaurant. You need a good retail broker to help you out.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "e7ffa43", "text": "From a landlords perspective they will want to keep an existing tenant in place to avoid paying for all or a portion  of a new tenants remodel cost and avoid losing rent while it's marketed/under construction. That being said, depending where your rents are compared to the market, LL will want to feel like they're getting a fair deal. \n\nTalk to a retail broker in you market and have them send you lease comps. Also, never hurts to be on the ball and tour other spaces to keep in your back pocket during negotiations.  ", "replies": [{"id": "e7fqt0j", "text": "thanks. Somehow, they are not like any other landlord i had before, and seem to relish playing hard ball. They bought a full ocuppancy small plaza (12 units) and have just lost one tenant (this month). Somehow as long as they show the owner that the plaza is above market in occupancy they should be ok. I am in the belief that the plaza will be changing dramatically in next 3 years as old tenants might leave. We are the plaza biggest draw, but pretty sure they are not aware of that.", "replies": [{"id": "e7g3w23", "text": "How do they perceive you? Great Tenant or just Okay? If your business is a major draw to the center, that is leverage you can use in negotiations. Keep in mind that you can negotiate in other areas besides currency. If your goal is to stay, have a plan. LL's prefer providing free rent vs discounting rent. Mostly because its easier to show a centers value to a lender when the rent still \"appears\" to be high. Depending on many other factors not mentioned, I would negotiate for the Personal Guarantee to be removed from the lease. Most tenants have signed their name personally - piercing the corporate veil. What other terms can you negotiate? Install renewal options. Put a CAP on your CAM increases and ask for a reconciliation to be sent to you every year. What about security? Can the LL pay to have Wifi cameras installed on premise? Can signage be improved?  \n\nIf you go dark, the landlord can expect to lose at least 3 months in rental income. \n\nIf they are playing Hardball, bring in a local Tenant Rep to negotiate for you. This will straighten out their Broker since they could have to split their commissions with your rep. They cannot deny you representation, they can only deny to pay for it since your space is not on the market. The rep will also give you a report with current vacancies in the area. Use anything and everything as leverage, but be understandable and easy to work with. Do it on paper not over the phone. Get a contract or amendment to begin your renewal. Tell them you want to begin the process. My recommendation in short...\n\n* Free Rent (3 months)\n* Remove Personal Guarantee\n* Request more security \n* Obtain NNN Reconciliation (annually) \n* Add Renewal Options to Contract \n* Cap CAM increases\n* \\*Get an exclusive for your use if you haven't already. \n\nBest, \n\n&amp;#x200B;\n\nMac\n\nOutlierGroup.us", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "e7fmf5p", "text": "From a landlord perspective, I would call them and say you are planning to start looking to buy a building and do improvements to move to if you cannot agree to renewal terms and 6 months doesnt leave you enough time.\n\nShows you have cash and are strong.  I would come to the table faster if they said that.", "replies": [{"id": "e7fo03s", "text": "Good Call. Go in strong and get the best deal you can. PERIOD. This is business be strong and project strength. ", "replies": [], "depth": 2}, {"id": "e7fqgol", "text": "LOL they know we don't have much money.\n", "replies": [{"id": "e7fqigb", "text": "Okay, well just wait and say you will close the business if they go to high.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "e7mqpni", "text": "[https://trzameen.com/](https://trzameen.com/)", "replies": [], "depth": 1}]