Whether you’re involved in a ground up building or remodel, it’s essential to have a clear picture of the landlord’s contribution before any work moves forward. If you’re a restaurant owner lacking fluency in construction—don’t sweat it, you’re human. Engage a contractor that can verify the current condition of the space and any upgrades that may be required to meet the needs of your operations. I came across a real estate advisory blog that calls out some valid points to consider if your space is being provided from a landlord “as-is.” After all, if the space doesn’t meet your requirements, it’s no good.
Based on the landlord’s work letter, a tenant can fully understand what they are being provided. However, this requires engaging the proper resources who can explain all areas if you lack the know-how. When expectations are convoluted, there is potential for nothing but problems in the construction process. Whether the landlord is providing a vanilla shell or a more upgraded space, a construction professional can help a tenant understand the cost implications for necessary upgrades, and what all areas of an agreement entail. Confusion around these areas may make it seem as though a landlord is deficient, however often times it is a lack of knowledge leading to confusion. This is why full fluency of an agreement is critical to avoiding delays and unforeseen costs.
In restaurants, particularly, there are watch-outs necessary to address:
1. Does the current HVAC system comply with your usage needs? Mark Chase of Restaurant Real Estate Advisors points out that restaurants require significantly more HVAC capability than other tenant uses.
2. In addition, he poses the question, “Is there enough electricity, water, and gas available? Upgrading electricity can be very expensive if there is not enough power available to the property.”
Most importantly, don’t assume. When there are less apparent items in your lease, don’t conclude that since you expect that provision, you’ll receive it from your landlord. Nolo.com provides a few examples of less scrutinized commercial lease terms that should be clarified:
1. Can your landlord lease space to competitors in the immediate vicinity of your space? Whether you believe it’s fair or unfair, this should be clarified if you have a preference.
2. Are you permitted to display signage in other areas on the property close to your location to generate additional business?
All good considerations not to forget. With other glaring terms like rent, security deposits and repairs, sometimes it’s easy to lose sight of the smaller, yet equally important, thoughts.