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Understanding Your Rights When Leasing (Part 1)

Negotiate to ensure yours will be only laundry around

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.

The makings of all commercial leases are similar in nature, Crossman says, whether it’s for a self-service laundry or for a convenience store, for example. Regardless of this, it’s crucial to hire an experienced real-estate attorney to advise you before negotiating and closing any deal, he adds.

“Just some of that is experience. If someone’s inexperienced, they’ll ‘hyper-focus’ on one issue and miss something else. Like you know, they’ll get wrapped up in some little thing and then they won’t address a relocation clause.”

In his experience, the average lease likely has property use restrictions, and a laundromat is usually a restricted use. So you’ve got to make sure a proposed lease allows laundry operations at the site.

It could be a mistake, like a person’s not thinking, but that’s why you have to go through that and make sure your use is approved,” Crossman says. “You want to have it exclusive for your use, it’s part of your defined, and there’s no way that it’s restricting what your use is.”

The monthly rent amount has to be near the top when weighing commercial lease terms that hold the most importance. Another is an impact fee, a one-time charge that can be exorbitant for laundries depending on which state you’re looking to locate in, but lease length and options to renew are right up there, too.

If I were a tenant, what I would want is a five-year lease with five-year options (to renew),” he says. “When a tenant has an option in their lease, it’s completely one-sided. It only benefits the tenant. It never benefits the landlord. When you have an option, all you have to do is say, ‘I’m exercising my option’ and you stay. … if the (rental) market goes south, you can not exercise your option and renegotiate a lower rent. … If you’re a tenant, fight for as many options as you can.”

Crossman says he would negotiate for a period of time to complete any buildout needed before the laundry could open.

If I get 90 days buildout and 90 days free rent, why don’t you just give me 180 days total? If I get my buildout done in 45, I don’t have any rent to pay. I would say, ‘Mr. Landlord, the reason to do that is it gets me motivated to beat the heck out of my contractor to get done by working nights and weekends.’ Landlords want tenants opened as fast as possible.”

The ability to assign a lease or to sublet is important if there’s a possibility that the business owner may pass on the laundromat to a family member or sell it someday.

Crossman says he would ask for exclusive use, meaning there couldn’t be another laundromat on the property. And he would seek a lease structure that includes monetary default rather than non-monetary.

If some sort of accident happens, you don’t pay your rent one month, make sure you have the right to cure (that) … if I were a tenant, I would want that a non-monetary default could not lead to them taking the space back.”

For example, if fellow tenants complain about excessive noise coming from your laundry, or you place signs in your windows that aren’t permitted, “(the landlord) can default you but it doesn’t mean they can evict you,” he says.

Regarding signage, ask if your business name can be included in the center’s pylon or monument sign for greater visibility. And seek to have parking spaces nearest your business entrance/exit designated for your customers’ use only, as needed.

Check back Thursday for the conclusion!

Understanding Your Rights When Leasing

(Photo: © slickspics/Depositphotos)

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