hotkiss

Hey all,
I am getting ready to sign my first lease and just wanted to see if you had any advice. We are getting a GREAT location so we are really excited, but we arent sure if we are getting jipped on our build out allowance and such. Currently, the space has had some water damage and the carpeting had to be torn out and the base boards are gone. This is fine b/c we didnt want it anyways. There are also some walls that are going to have to be torn down and the leasing agent is saying that that will have to come out of our build out allowance leaving us with 5000. The space is 1500 sq. ft and we are getting 6000 allowance. does this seem fair, if not any ideas on what we should ask for? We also know we are going to have to upgrade the electrical and the HVAC which is only 4ton b/c we need 10 ton. No estimates just yet on how much all this will cost so thought maybe you guys could shed some light!
thanks

unity

Its hard to compare apples and oranges and say they are the same. Property is very diverse when comparing market to market. So I cant help you there.

But I can tell you that the building I am in was quoted $10k to install a new 10 ton unit. Keep in mind there is an existing 10 ton but its not working well. It a dual stage and the first stage is shot. Since there already is a 10 to in place its a drop right in. If you are upgrading from a 4 ton is very likely that additional work will have to be done adding to the cost.

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jagerontherocks

hello
a couple of things best 2 books you could ever own are nolos leassing for a commercial property and navigating commercial property leases. they are pretty cheap and will explain very well. whats up in the leasing industry and how to work the whole allowance thing. if there is crazy things wrong with the place you really should use a real estate lawyer and I emphasize a commercial real estate lawyer they will know whats up and make sure the whole lease is sound and you are not getting screwed on your triple nut. It is crazy what your lease might conveniently leave out or in. are the exclusions from anyone doing anything remotely in your business int the same area owned by the landlords. ie nail salon throwing a couple of beds in the back room and screwing you. It was worth the couple of grand in the long run for me just to start the conversation and ensure that everything on your property need list is handled and finalized in the lease. As far as numbers I am getting 17000 on the 1700 sq feet and that is brand new building and is a vanilla shell. your property already has previoys issues that should not be part of the allowance just to bring it up to norm and commercial real estate will tell you. where is the water damage? did it flood or did it leak ? if it leaked was the roof properly resealed and along those lines can sustain a 10 unit. if the carpet had to come out it there mold issues, sometimes its not obvious but if you are anywhere near the coast or have high humidity it could be along term problem. how sound is the structural at the base of the walls if the baseboards came op they could have been trying to let the walls dry out. it sounds like they are screwing you I would at least find a real estate broker not affiliated to help you ensure your success but sounds like you need a comm lawyer to make sure you are not getting screwed other places in the lease besides structural previous damage.
your lease will define you operating expenses so dont cheap on your one big nut to crack.
i

mjabaay

5k is not squat in terms of $$$$ for buildout, even doing it yourself it will be gone the firstweek of construction, and that is just the carpenters.

get all of your HVAC and Electrical upgrades covered, and if the bath has to move then have them do that also, take possesion of a vanilla box, than get another 5k in build out.

cdbeshore

From an insurance perspective, make sure you understand the requirements of the lease. Get the insurance requirements and call insurance companies and get quotes before you sign to make sure you can actually get the amount of coverage the leasing company is requiring. I've seen many salons have a very high insurance requirement that they didn't consider and later had difficulty getting insurance. Sometimes the landlord will work with you and sometimes they won't.

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missmojorising

Tenant Improvement monies should be based on square footage (Not just a blanket amount ~like 5K~) If they are offering 5K, you are basically getting/looking at a flooring allowance which is roughly $3.00 per square foot -- floor allowance is great but you better be ready to cover the cost on everything else -- for someone else's building -- like upgrading electric, more HVAC and plumbing. Did you use a commercial real estate agent to negotiate this space? Do you have a business plan? Do you realize this is a seasonal business and season is almost over? I will gladly answer any questions you might have by PM -- but you might not like the answers.

PS: How many other salons are near/around this great location?

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bryman43

Agree with jagerontherocks!! If your lease is triplenet make sure all the issues the building had in the past will not be charged to you. A lawyer will be well worth the money in the long run! As far as 5k, that wont go very far, buildout will be around 50k maybe more depending on how much you do yourself. A/c 12-15k, electric 8-10k, floor 4-7k and you still dont have walls.

jagerontherocks

man my spelling sucked
anyways its a tenants market out there even here in californication.
but I hope you git the stuff squared away. just wording ona letter of intent can lock you in if you dont respond to it. like I said get nolos book as some great advice was given to me by mis sally. this is not the time to be getting in if you dont have the cash.
word
buy used ya heard

missmojorising

If she thinks this response was rude wait 'til she hits the off season wall or gets advice from Engfant. Speaking of Off Season -- it's a REALITY and pretty standard in EVERY market in this industry. No, good deed goes unpunished....Good luck with that flooring allowance -- don't spend it all in one place.

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