Need to rent retail space this fall-best terms for leasing

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fujmeister's picture
fujmeister
Status: Member (Offline)
Joined: Apr 24 2009
Posts: 4
Need to rent retail space this fall-best terms for leasing

 Hello,

First time poster here, I have been learning a lot from this site. So big thanks to all esp. Chris Martenson.

I am going to open a holistic health center this fall and I am starting to look at spaces.

I live in a high-rent area, with commercial space start at around $1.75/sq ft. I need at least 800 square ft. So I am prepared to spend at least $1,400/mo for rent.

From what I understand, I can expect commercial real estate market to tank in 2013-2014. 

However, it seems that in most commercial lease, landlords prefer tenants to sign 3-5 years, especially if you want  to negotiate a better deal, for example,  free rent the first few months, having space built out etc.

Here are my questions:

1) With the imminent greatest depression in mind, does it make more sense to try to sign a lease that is as short as possible, i.e. 1-2 years?

2) Is NNN something that I should try to avoid?

Thank you.

-D

kennyq's picture
kennyq
Status: Bronze Member (Offline)
Joined: Jul 30 2008
Posts: 82
rent
fujmeister wrote:

 Hello,

First time poster here, I have been learning a lot from this site. So big thanks to all esp. Chris Martenson.

I am going to open a holistic health center this fall and I am starting to look at spaces.

I live in a high-rent area, with commercial space start at around $1.75/sq ft. I need at least 800 square ft. So I am prepared to spend at least $1,400/mo for rent.

From what I understand, I can expect commercial real estate market to tank in 2013-2014. 

However, it seems that in most commercial lease, landlords prefer tenants to sign 3-5 years, especially if you want  to negotiate a better deal, for example,  free rent the first few months, having space built out etc.

Here are my questions:

1) With the imminent greatest depression in mind, does it make more sense to try to sign a lease that is as short as possible, i.e. 1-2 years?

2) Is NNN something that I should try to avoid?

Thank you.

-D

(My personal opinion only)

$1,400/month is not includes maintainance, garbage pick up, water. landlord's insurance.etc. right? That may double your "rent" easily. If you don't have much capital investment and your out of job that is fine. If you have a reliable job and need large investment which you don't think you will collect back within 3 years, that is bad.

For a new business owner, they are always expect things much brighter than realty. Many seasoned business people are having hard times. There are not much meat left for new comers. You should expect more fierce competition when things get worse.

But you don't try, you will never know. For me the "hurricane" is coming, I need a hatch, not building something. Good luck.

 

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jpitre's picture
jpitre
Status: Gold Member (Offline)
Joined: Mar 3 2009
Posts: 366
Rent

Try for 2 years and an option to extend another 3 years on the same terms and conditions

Negotiate to have as many  of the expenses included in your base rent as possible (not likely to get electricity and gas)

Bargain for as much free rent and improvements as you can get. If the improvements are expensive, maybe even pay a little more for the first 2 years to help defray some of the landlord costs early on

 

Jim

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
I'm curious.  What does a

I'm curious.  What does a holistic health center entail?  And what's NNN?  It's a good market for  (commercial) tenants now.  Look around and definitely negotiate aggressively.  I'd go for a shorter term. 

fujmeister's picture
fujmeister
Status: Member (Offline)
Joined: Apr 24 2009
Posts: 4
 Thanks for all your

 Thanks for all your replies. The primary modality used in this clinic  will be acupuncture, also herbal medicine. Over time, self-care health classes and programs will be added. Acupuncture will be done in a comfortable, quiet big room with several chairs / massage tables.  (In the U.S. this way to administering acupuncture has been called "community acupuncture". In the U.K. it is typically called "multi-bed acupuncture" Because the acupuncturist (that will be primarily me, with 1 or 2 other acupuncturists) can attend to multiple people at the same time and not needing a room for each person, the cost will be rather low and accessible to people even without insurance, or just got laid off etc. During the last recession, clinics like these actually saw their business grow, instead of plummeted like many other practices that charge high price or rely on insurance patients.

So this is a low cost, high volume model. The only problem is that i will need a physical space that is large enough+receptionist space+perhaps back office. I know several of these clinics rented a space that is larger than what they need initially, and sublet the extra space out to other massage therapist, naturopaths etc. to help pay rent.

However, in this economy, I think it probably won't be good idea to count on having subletters to help pay rent. 

ao: triple net lease (Net-Net-Net or NNN) is a lease agreement on a property where the tenant or lessee agrees to pay all real estate taxes, building insurance, and maintenance on the property.

kenny: too bad in our field, there aren't too many stable full-time jobs to apply for. Most have to be entrepreneurial.

Thanks again.

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
fujmeister wrote:  Thanks
fujmeister wrote:

 Thanks for all your replies. The primary modality used in this clinic  will be acupuncture, also herbal medicine. Over time, self-care health classes and programs will be added. Acupuncture will be done in a comfortable, quiet big room with several chairs / massage tables.  (In the U.S. this way to administering acupuncture has been called "community acupuncture". In the U.K. it is typically called "multi-bed acupuncture" Because the acupuncturist (that will be primarily me, with 1 or 2 other acupuncturists) can attend to multiple people at the same time and not needing a room for each person, the cost will be rather low and accessible to people even without insurance, or just got laid off etc. During the last recession, clinics like these actually saw their business grow, instead of plummeted like many other practices that charge high price or rely on insurance patients.

Interesting.  My wife has often talked of setting up a similar type of facility.  Good luck with your venture.

 

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