by Jill Hendrix

#115, 25 February 2008

Store Location and Lease Negotiation

How to Start a Clicks-and-Bricks Used Bookstore Series

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Part 2: Lease Negotiation

Now that you've located some potential store locations, it's time to begin thinking about lease negotiation. If you are looking at space in a retail shopping center, you will most likely be asked to sign a triple-net lease. This means that, in addition to rent, you are also paying the landlord's taxes, insurance, and maintenance costs. These extra costs are often lumped together and called a CAM fee.

Before beginning negotiations, make sure you have all the background information you need on the property. Here are things you should find out:

  • The square footage of the space

  • The landlord's asking rent (including all other fees like CAM); get this info broken out into each different fee

  • The CAM charge for the past 5 years (has it stayed the same, gone up each year, etc.)

  • Whether any utilities are included in the rent.

  • The minimum acceptable lease term.

  • The age of the shopping center, roof, and your unit's HVAC system.

  • Any upcoming planned repairs.

  • Do a walkthrough of the space and make an itemized list of anything needing repair (do all the lights work?, does the toilet flush?, etc.) and anything you will have to change to get the space to work for your store - i.e., new carpet, more lighting, etc.

  • The type of signage required.

  • What others in the shopping center are paying (if you can get them to tell you).

  • The asking rent of similar storefronts.

  • Whether there are any parking issues at certain times of day, days of the week, etc.

Once you have your facts, you can begin negotiating. Let your commercial real estate agent now that you are interested in the space, but ...

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