Q: My wife and I are starting a retail business and have been looking at commercial space. We’ve seen a few leasing agreements and want to know what types of language to look out for when signing.
A: Once you’re serious with a particular space, all things considered, carefully evaluate all of the actual costs of leasing, including costs of moving, installations, security deposit and advance rent requirements. A lot of this should be contained within the broker’s term sheet, if you’re using a broker. You need someone experienced who can advise you about the best terms you can negotiate which include, the extent of the landlord’s build out of the space, rent abatement, renewal options, term of the lease, escalation, pass thru expenses for which you may be responsible over the lease term and the extent of your responsibility for real estate taxes usually over an agreed base year and adjusted by your percentage of space in relation to the whole bldg. This list is by no means exhaustive, but addresses some of the more important and material terms for consideration.
Abraham B. Krieger is Co-Chair of the Commercial Real Estate practice group and a member of the Corporate Finance Law practice of Meyer, Suozzi, English & Klein, P.C. located in Garden City, Long Island, N.Y. Mr. Krieger joined the firm in 2007 focusing his broadly-based practice on representing businesses and individuals in commercial and residential real estate lending, sale, and lease transactions and real estate, lease and commercial litigation. An integral portion of his practice includes representing commercial lenders and borrowers on real estate fiduciary transactions and title insurance companies on defending fee title and mortgage validity claims.
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