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Negotiating your retail space: Part 1 of 2

As a small business owner, every dollar counts. That's why you take the time to make your business decisions carefully and logically and ensure that your money is not wasted.

Picking the right retail space can mean the difference between your business succeeding or failing. But finding the right space goes beyond choosing the location with plenty of foot traffic and good parking.

Having the perfect store also means having the perfect lease. Negotiating a lease can be a complicated process and it is important that you understand every aspect of the lease in order to know your duties as a tenant and the duties of your new landlord.

In the first part of this series, we will look at the physical aspects of the rental space, such as parking and utilities that you should consider when negotiating a retail lease.

Inspection

When you are considering a space for your business, the first part of negotiations should start with an inspection.

Most landlords will insist that you take the property "as is." Typically, they do not want to spend time or money making a lot of repairs. In general, this is understandable since you will be putting in your own counters and fixtures. However, there are some things you definitely don't want as part of your "as is" lease.

An inspection will uncover problems like mold, bad electrical wiring, worn out air-conditioning or heating systems, and non-compliance with federal American with Disabilities Act guidelines.

Have an escape clause in place to ensure that you can terminate the lease if it does not pass inspection. If the landlord refuses this option, require that he or she provide you with a signed statement testifying that the property is in compliance with all federal and state codes.

In addition, be insistent that the landlord provide a statement that the air and heating units are in good condition and will continue to be operational throughout the terms of your lease.

Utilities

Don't pay for another retailer's electricity or water use. Be sure that all utilities are separately metered to your unit.

Very often, when renting a retail space in a mall, the lease requires that you pay a fixed percentage of utility usage. This might be fair if you are in a usage block being divided by other traditional retailers, but if you are next to a hair salon, you could end up paying a portion of their water bill.

Heating, air, and ventilation

Try to aim for a place that provides a separate heating, air, and ventilation system for each rental space. Having a separate unit gives you control of your thermostat and allows the system to run more efficiently.

In older buildings, the structure is often outfitted with an HVAC unit on the roof that pumps hot or cold air to the various spaces through ducts that run throughout the structure. If the space you choose is on an HVAC system, be sure to obtain an agreement from the landlord that the ducts and compressor will be properly maintained.

Parking

Parking is an important consideration for your customers and your employees. If possible, get your landlord to provide at least a few dedicated parking places for your customers and employees. These spaces should be fairly close by the entrance to your store or the main building entrance closest to you.

By negotiating the right retail space, you can provide a comfortable shopping experience for your customers and a comfortable work environment for you employees. Since negotiating a real estate lease can be a complicated process, take the time to look into Pennsylvania lease requirements.

Get in touch with a Wilkes-Barre attorney with experience in commercial lease contracts for advice on negotiating your retail lease.

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Vinsko & Associates, P.C.

Vinsko & Associates, P.C.

253 South Franklin St. | Wilkes-Barre, PA 18701 | Phone: 570-970-9700 | Fax: 570-970-9711 | Wilkes-Barre Law Office Map

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