Commercial Lease, plz advice

I’m starting my pharmacy and landlord wanna do long term lease ( 10 years plus 2 5 years option to renew ) which is longer than average 3-5 years, in advance he will contribute to build out and provide 3 months rent free, with me signing personal guarantee,Any idea ?? Thx
[{"id": "f6dckny", "text": "it\u2019s probably smarter to not get locked in to 10 years right off the bat, just to hedge against any unforeseen circumstances. see if he\u2019ll go for an initial 5 year term with (3) 3year options", "replies": [{"id": "f6e5971", "text": "He can do 10 years with opt out option after 5 years with 6 month rent penalty", "replies": [], "depth": 2}], "depth": 1}, {"id": "f6ddkfz", "text": "Avoid the guarantee if possible", "replies": [], "depth": 1}, {"id": "f6ddv1e", "text": "10 years is a relatively long term lease for a starting business. I'd see if the landlord will bite at 5-year options. \n\nGood luck!", "replies": [{"id": "f6e4zmw", "text": "He agreed on 10 years with opt out option after 5 years with 6 months rent penalty !!", "replies": [], "depth": 2}], "depth": 1}, {"id": "f6djuqf", "text": "Long term is good\n\nNo need to renegotiate in 5 years.\n\nBut PG is no good for 10 years. Do a limited personal guarantee. You can terminate the guarantee if you go out of businsss during that term if you give a certain notice. (like 180 days).", "replies": [{"id": "f6hl9zt", "text": "What's a personal guarantee if I may ask?", "replies": [{"id": "f6hun8m", "text": "A personal garage like guarantee is a promise to pay rent personally. I.e. an obligation to pay regardless to the performance or even existence of the corporation.\n\nIn this case. Company goes out in 5 years, he can get sued for the remaining 5", "replies": [{"id": "f6hwhjg", "text": "Got it. Thanks, man!", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "f6e59m7", "text": "What type of rent increases is he proposing? might be a good idea to lock in a low rent if he is proposing a flat rent.\n\n&amp;#x200B;\n\nif there are rent increases, probably better to go with a shorter-term and more options", "replies": [{"id": "f6edkd9", "text": "There is increase \n22.5 year 1\n23.5 year 2\n25 year 3 \nThen 4-10 at pci rate increase", "replies": [{"id": "f6edslf", "text": "Seems aggressive.  I agree with everyone else and think you should get a shorter term", "replies": [{"id": "f6extb3", "text": "The best he can do is 5 years opt out option for 6 months rent penalty", "replies": [{"id": "f6g75ij", "text": "Then don\u2019t do it. You are already risking enough.", "replies": [], "depth": 5}, {"id": "f6gdcm0", "text": "You can always counter offer ... lower the option to just 2 months of rent . \n\nIs he asking for percentage rent also ?", "replies": [{"id": "f6gdrtc", "text": "I did counter to 3 months penalty but he declined", "replies": [{"id": "f6geayy", "text": "Do you have another location that you\u2019re looking at ? Is it a very sought after location ? I would go radio silent for a while in hopes that he senses you\u2019re looking elsewhere and then offer you some concession", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "f6e5rce", "text": "You want a MINIMUM 10yr lease contrary to the other advice. \n\nIn retail, most of the goodwill value of your business is a function of the location, once you set up shop, your success will be fairly binary, either succeed or fail. If you succeed, you want as absolutely long term rights to the space as possible. If you fail, well, then who cares how long you signed up. \n\nThe initial 10yr term is very common in retail and allows the landlord to amortize the costs over a longer time horizon and charge you back less per year.\n\nRegarding the personal guarantee, unless the business is established and has other form of collateral and assets, you will need to provide something. I suggest limiting it to the costs the landlord is investing in the space and have the amount decline over a 5-10year period. So each year your personal exposure is lower and eventually gone.", "replies": [{"id": "f6e7y6q", "text": "I\u2019d say 10 year leases are all dependent on the market which he didn\u2019t state. In my area the only retail tenants signing 10 years are large credit tenants. Most local businesses would never be expected to sign a 10 year.", "replies": [], "depth": 2}, {"id": "f6fjen5", "text": "I'd try to make it the same length with options. 10 year terms are absolutely huge for a new business. Longest I've had a startup sign is 5 years.", "replies": [{"id": "f6fk9u1", "text": "This isn\u2019t a \u201cstart-up\u201d it\u2019s a pharmacy. A pharmacy is going to last 30-40 years or longer. It\u2019s to the tenant\u2019s benefit to sign as long as possible especially given they haven\u2019t signed personally. Securing location rights for as long as possible is to the tenant\u2019s benefit.", "replies": [{"id": "f6gsbsu", "text": "I disagree. If it\u2019s his first location then I\u2019d consider that a startup. To assume he\u2019ll be around 30-40 years just because he is a pharmacy is a bit misguided. If that was the case everyone would start a pharmacy.", "replies": [{"id": "f6gxhc0", "text": "Assume you are right, if the pharmacy can\u2019t make it, you\u2019re not going to move \u201cit\u201d elsewhere... you\u2019re going to let that corporation die with the location and start a new location elsewhere. There is no value in a pharmacy without its location. So you might as well put as much term on the location as possible - if it is successful, the location is the greatest asset of the business.", "replies": [{"id": "f6gygjy", "text": "If it\u2019s unsuccessful he is ruined for a long time. He hasn\u2019t given a lot of information on said location or terms of the contract. \n\nHe is personally Guaranteeing the lease too. Also yes you can let the Corp go bankrupt. That\u2019s still going to show up on this guy in the future. Then it\u2019ll be harder to start a business in the future. \n\nPlus he hasn\u2019t even said what makes this location so great. Maybe it\u2019s in an area that\u2019s declining, or the bubble is about to burst. \n\nThe info he has given is minimal. To say just go for it because pharmacy I think is short sighted and not good advice without digging deeper.", "replies": [], "depth": 6}, {"id": "f6hhca0", "text": "The question isnt where the value is, it is how much risk he is exposing himself to. Yeah I agree if it was just a lease between Landlord and Pharmacy LLC then go ahead sign 10 years, but the personal guarantee is worrisome. If he were my client I'd suggest striking a better deal even it means higher rent in the short term. I've only had national names sign leases that long CVS,7-11, and a Subway.  I've a lot more business fail than succeed over 10 years.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "f6gdfpg", "text": "I agree with u it\u2019s a good thing if business succeed, but if failed I\u2019m gonna have to pay a lot to break the lease", "replies": [], "depth": 2}, {"id": "f6ilabp", "text": "Exactly this ^ I am in retail and most of our leases are 10 years. Hardly ever see less than that unless we are putting minimal $ into the space.", "replies": [], "depth": 2}], "depth": 1}, {"id": "f6e5x5b", "text": "Deal looks good, but drop to a 5 year term and push back on a guarantee at 2-3 years.", "replies": [], "depth": 1}, {"id": "f6e7sfe", "text": "From your standpoint I\u2019d avoid a 10 year lease at all cost. \n\nWhat if unseen problems arise in your life like a family sickness, lawsuit, accident etc. You do not want to be stuck with a long lease if shit hits the fan. \n\nShoot for a 5 year with a five year option at the end.", "replies": [], "depth": 1}, {"id": "f6egj2y", "text": "It\u2019s In Florida", "replies": [{"id": "f6h72pm", "text": "Look for a broker who can help you with information about if the deal you have worked out is good for bad. \n\nTypically medical users tend to sign a 10 years so they can get extra TI Dollars, and so they can have continuity of operations without having to relocate.", "replies": [], "depth": 2}], "depth": 1}, {"id": "f6ehdvh", "text": "Thx everyone for advice, quick update, Landlord is welling to do 5 years opt out with 6 months rent penalty, plus paying any amortized unpaid commissions and tenant improvement !!", "replies": [{"id": "f6gjv2c", "text": "Unpaid commissions, amortized TI's, 6 month exit penatly, &amp; the personal guarantee on the full 10 years? Ouch... Good Luck!", "replies": [], "depth": 2}, {"id": "f6gski3", "text": "You rlly need to math out that buyout at 5 years and see if you can afford it. Be realistic because if you need the buyout then your business is either so successful that your moving to a better location or it\u2019s failing. No other reason to have a buyout in a lease.", "replies": [], "depth": 2}], "depth": 1}, {"id": "f6fh5ri", "text": "if you're not comfortable w 10, try to get 7\nwhats the cost of buildout and whats the rent. this affects what the free rent would be.  there is you other way to determine what makes sense without these numbers.  \nalso personal guarantee is.obviously what he wants but doesnt make sense for you.  most should be ok w a good guy clause which makes your guarantee limit.   you need an out clause and you need a good lawyer.  there's no moving fwd without a good real estate lawyer who's experienced in your specific market w your type of lease.", "replies": [], "depth": 1}, {"id": "f6fmcdw", "text": "Agree with most of the advice on no personal guarantee unless it burns off over time. I also suggest a 5 year term instead of 10, but that\u2019ll depend on the buildout cost the landlord is absorbing.  Keep the 3 months free in any scenario though.", "replies": [], "depth": 1}, {"id": "f6g7m95", "text": "Great lease for LL it seems", "replies": [], "depth": 1}, {"id": "f6gmbtq", "text": "What does the lease assignment language entail? Most commercial leases stipulate the logistics of assigning the lease. \n\nFor example, let\u2019s say you sign the lease as ABC Pharmacy LLC. A couple years later, biz is booming, you bring in a business partner and reincorporate yourself as ABC4U&amp;ME, LLC, dissolving the original ABC Pharmacy, LLC. Is that okay?\n\nAnother example, ABC Pharmacy LLC biz ain\u2019t booming. Walgreens wants to assume your lease. Is that okay?", "replies": [{"id": "f6gnhdi", "text": "- Assignment of lease. Tenant may assign lease with landlord approval of new tenant, a credit ration above 720 and a min working capital of $100,000.", "replies": [{"id": "f6gnjzv", "text": "Seems very fair and reasonable.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "f6grc36", "text": "What makes you sold with this option? How are you looking for space?\n\n10 yr lease with 6mo buyout is expensive and seemingly unnecessary if you want a shorter term lease.\n\nAre they giving you a lot of TI and free rent? \n\nGuaranty I\u2019d have go away after 3 yr of rent payment.\n\nHave you hired a commercial real estate agent that specializes in retail space?\n\nWhat is the market rent for the area? \n\nWith a 10 year lease you better be getting a lot of free rent and ti or a very below avg rental rate. Need to know more on the lease terms to give educated advice.", "replies": [], "depth": 1}, {"id": "f6h5rqy", "text": "The reason the landlord is wanting a long term lease is because he\u2019s going to sell the building as an investment at some point. The 5 year termination is not favorable to the tenant as it\u2019s a one time option. You should negotiate the level of Guaranty in the lease to give you flexibility. If he\u2019s set on a 10 year deal, I would offer a 3-4 year guaranty than just unamortized TI/Commissions", "replies": [], "depth": 1}]