Commercial lease renewal question

[momtobits]

HI ,

I have a few questions if anyone out there has some knowledge about commercial leases.

I have a small store and my lease is expiring Feb 2013. I am finishing up 7 on a 10. The block was crapola when I moved in and in the past 2 months has started to explode. I have put EVERYTHING into my business, it is my entire life and the only thing that matters to me pretty much. I wish to renew now. Is it to early to request this ?

I sent the LL a short friendly email about a month ago asking what the new terms will be and he did not respond. I am very concerned he will see $$ signs given the fact the neighborhood is changing so much. I obv want to lock it in now and not be left hanging out to dry at the last minute.

A few facts: rent has never been late in 7 years. I have a very very good guarantee from a kind ex. The LL only owns this building and inherited it from a family member. I have put a lot of work into improving the space.

I guess my question is how to approach this and what is the best way to word it etc..

Thank you !!

[TenantNet]

As you know, this site is for residential tenants. But in general, in commercial situations, the lease rules. No stabilization, no habitability and so on. I don't know what you mean by "7 on a 10."

As with many retailers around town, you made the investment - presumably at a lower rent - when the block wasn't so great. And now, there will be pressure to substantially raise the rent, or even to bring in other businesses.

I think you're right now to try to lock it in. But there are no protections. If you don't have a good RE lawyer, I'd get one. I would also spend a lot of time researching what is going on real estate-wise on your block and in the neighborhood. The knowledge will help you in negotiations, and also if you need to find a new place.

The best thing, IMHO, is to get the LL to understand that you've made an investment that benefits him.

[ronin]

He means 7 years on a 10 years lease Tenant (see the jargon?).

Frankly, if this is someone who just inherited the building you may join the ranks of other small businesses that have been displaced by LL's holding out for a chain to rent the store. Whole neighborhoods have empty stores because the LLs dream of a chain tenant paying 10 times what the former commercial tenant did.

The fact that you paid rent on time is of no consequence. The LL is busy dreaming about major corporate chain signing as a tenant and paying 3 years rent double yours in advance.

Of course, there aren't that many corporate chain suckers out there, so block after block is full of empty stores.

Housing Notebook dealt with this issue in 2001. They may still have the audio available.

[TenantNet]

Maybe in some neighborhoods, but chains aren't taking first-floor retail space in tenements, whose floor plates are often less than 2,500 SF. Often less.

What you do see are noisy bars, expansive restaurants, and on corners, banks. In many cases there are constraints of zoning or the inability to combine the first floor spaces of adjoining tenements. But even so, gentrified neighborhoods do not have reams of empty stores, even where LL's are holding-out.

Such gentrification works in concert with the weakening of the rent laws. But the latter is not significant without the former, a fact most politicians - and some of the sold-out tenant groups (i.e., Housing Notebook) ignore.