Lease terms

[ptonsparky]

I have a chance to rent a larger building. Buildings of any sort are in short supply and this one will take some work and expense on my part to make useable. The rent is reasonable and compares $/sg ft with what I have now. For rent or lease terms, what is the typical length of time you enter into an agreement? My current building has been a verbal agreement and the rate has not increased since I moved in.

 

[bjp_ne_elec]

Typically it's on a yearly basis. Then some will allow you to just extend it monthly, while others will insist on a new lease, locking you in for another year. I'd work with the owner/landlord if you're going to do improvements. If the improvements help increase it's lease value, you can hopefully negotiate that he pays for some of these improvements. Any improvements you pay for, you'll have to realize that this money is gone if you decide to terminate your lease.

Sounds like your present arrangement is "sweet" - but with a lease agreement at least you know you're locked in for a fixed duration. The arrangement you have now, the owner could decide to not be nice anymore and increase your monthly rent.

Is the present property not large enough to fit your business?

 

[ptonsparky]

Current building is small with no restroom facilities and located off the beaten path. I installed heat, a/c and it has been very nice to work out of with exception of RR. My wife wants a new house out in the boonies so our local facilities will no longer be available. So much for retirement.

New location is old building, downtown on the main drag (all 3 blocks of it) with water & sewer. Just a shell with everything needing to be done on the inside. Don't mind spending the bucks but a 3 to 5 year agreement may be needed for payback.

 

[Rewire]

Do you think you will out grow this building and if so how many years.Many owners want to keep the lease to a minimum so they can renegotiate the terms.

 

[ptonsparky]

I don't plan on growing all that much. Owners were not against a 3-5 year lease agreement. Having a GC come in to give price on changes I want. Anyone know where I can find a decent electrician..that works for less than I do? Never have been able afford myself.

 

[brian john]

Depends on the market, we had a 5 year lease with terms for purchase, my wife had a 5 year deal and included monies for build out. Longer term lease can work for or against you. Locking in terms for the future, and holding you in place should you grow a positive and a negative.

 

[ElectricianJeff]

I lease several commercial properties.

My typical lease is 2-3 years upfront with a pretermined option for a few 1 year renewals. All of my leases readjust annually and are tied to the CPI and read as follows:

"The base rent shall be adjusted as of date by applying a cost of living adjustment which cost of living adjustment shall be adjusted thereafter every year.

The cost of living adjustment shall be determined by measuring the percent change, if any, in the Consumer Price Index (defined as: Consumer Price Index for all urban consumers, all items, Midwest Selected Metropolitan Areas, Midwest Region with a size population of less than 50,000), provided that said increase, if any, shall not exceed 6% in any one year period."

Works for me and the tenants also.

You might want to consider amortizing a percentage of the leasehold improvements over the first 3-5 years of the lease via a rent reduction.

Hope this helps