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Understanding Your Rights When Leasing (Conclusion)

Forge realistic expectations based on age/condition of property

WINTER PARK, Fla. — Many laundromat owners lease rather than own their space, so it’s important that they understand their rights as a lessee, as well as the responsibilities of the landlord. And gaining this understanding begins from the moment they set their gaze on a particular property and begin negotiations.

John Crossman

John Crossman

John Crossman, CCIM, CRX, is a well-known and respected retail real estate expert with 30 years of experience. He’s president of Florida-based Crossmarc Services, which buys and develops shopping centers, so he’s well acquainted with the finer points of leasing commercial properties.

Part 1 touched on the makings of commercial leases, possible use restrictions, and negotiation tactics. Let’s conclude:

Whenever there is a disagreement with your landlord, always pay your rent on time, no matter what, Crossman advises.

Some tenants think, ‘I’m going to withhold my rent and send a message.’ No, you’re not. You’re going to lose all your power. Pay your rent, then fight.”

Communicating with the landlord beyond mailing or dropping off the rent check each month can have its benefits, according to Crossman. All healthy relationships have boundaries, and a business contractual agreement is no different.

If you have the ability to have, you know, a cup of coffee with your landlord once a year, that’s pretty helpful,” he says. “First off, it humanizes it. You know you’re dealing with (this person) vs. ‘the big, bad landlord.’ You also get to know them a little bit better, and I think it’s also good for them to have a sense of how your business is.”

Crossman says the more knowledgeable the tenant, the better the tenant, and part of developing this knowledge base is establishing realistic tenancy expectations based on the age and condition of the property to be leased.

If you go into a 50-year-old strip center with no anchor (tenant) and you’re paying cheap rent, you should have a low expectation of what your landlord’s going to do,” Crossman says. “There’s not a lot of money to do things, as opposed to a brand-new, high-end property. Have clarity about what you expect them to do and not do.”

Relocation would likely be difficult and costly for the average laundromat owner leasing his or her property. So what can a new owner do to protect the business against the prospect of relocation?

Crossman says he would seek to have the lease spell out if the business were to be relocated, it could only be moved to a similar spot (if the laundry is located on one end of a shopping center, it could be moved to the other end but not somewhere in the middle, for example).

And then you’ve got to put in there that it’s all on the landlord’s dime,” he continues. “The landlord has to pay for the relocation costs, the space has to be provided with all impact fees paid, you need to detail that out so there’s clarity.”

Common area maintenance (CAM) fees are paid by tenants to landlords to help cover costs associated with common-area overhead and operating expenses, such as removing snow from the parking lot or maintaining building security. While most leases clearly spell out these fees, Crossman says some of his clients were surprised by them when their first rent payment came due, he says.

You need to know exactly what the dollar amount it is you’re writing at the end of the month. Whether it’s triple net, whatever it is, with sales tax, what is the exact dollar amount? Fully understanding what (that covers) is absolutely key.”

There’s a lot about leasing that’s similar no matter what property you may be looking at, yet every laundry owner has the opportunity to negotiate a unique agreement that’s beneficial to them and their business.

But if you can’t agree on a deal on your first site of choice, there’s probably another suitable property in your area that’s fit to lease.

Miss Part 1? You can read it HERE.

Understanding Your Rights When Leasing

(Photo: © vectorpouch/Depositphotos)

Have a question or comment? E-mail our editor Bruce Beggs at [email protected].