Empty space & building lease... need some feedback.

Discussion in 'Growing and Managing a Business' started by Wmg89, Jan 11, 2012.

  1. Wmg89

    Wmg89
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    To start off, I made a post back in July about opening a video game store. I have since just recently checked into what the cost of a empty space in a building would be. I'm going to list off the numbers, and I this is where I need the feedback at.

    $13.50 Square ft
    1320 Square ft
    $17,820 total

    I'm 90% sure I was told that includes utilities, and internet. One thing I failed to ask, and he did not mention was how he went about his leasing... and this is where I am stumped at. There's no possible way that is the monthly price of it, but I could be wrong. It's not in a high enough wanted area to be that much to begin with. If that is the case though, the two places that are right next to this empty space, a tax business which is the same size, would be paying just as much, and a self owned Mexican restaurant (which is easily triple in size) would be paying double that.

    $17,820 divided by 12 months = $1,485, which sounds SO much better.

    With not knowing how the leasing works, what sounds like the most probable case? Any feedback would be great.
     
  2. ArcSine

    ArcSine
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    Rental rates are usually quoted in terms of annual rates. Hence it'll be 1,485 a month.

    As a side note, remember to vet the lease to the point of being able to recite it from memory. OK slight exaggeration, but not by much. You might be quoted a base rate, but a lease might have additional terms that would add to your cost, such as...

    • An escalator clause (pretty common). Usually built in longer-term leases to let the monthly payment keep up with expected inflation.
    • Common area maintenance ("CAM") charges; additional fees you agree to pay for your share of upkeep of "common areas".
    • "Piece of the pie" clause. More common in retail, shopping malls, etc. It's where the landlord gets some X% of your gross receipts, in addition to your base rent. Won't be a component of every lease, but I've worked with clients that had variations on this idea in their contracts.

    A lease is no different from any other contract....good idea to have an attorney give it a once-over under a bright light before you sign. Good luck!
     
  3. Wmg89

    Wmg89
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    Thank you. That is the type of answer I like to hear, lol. The small information you listed is good to know. I have never started my own business/company, and I have a good amount of research to do. When I'm told "that includes everything", I do expect that cost to include some stuff you mentioned, I'm like anyone else who could have a set plan, then is thrown a curve ball to de-rail a possibility.
     
  4. DaveB

    DaveB
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    Hi Wmg89,

    Also if you plan on signing a property lease make sure you think long and hard about all the small details you want / will encounter. There are lots of variables such length of lease, walk away clause, ease of transfer among many other terms. Make sure to talk with someone experienced in business or leasing business properties to make sure everything you should be looking out for. Having a lease and your own business is a serious responsibility and you never want to get in over your head.
     

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