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Signing the Lease: What Your Landlord Doesn’t Want You to Know

Updated: Dec 8, 2018

Whether you are looking to start a completely new restaurant concept from scratch or just looking to expand into a new location, there are a lot of things to consider.

Of course, you’ll need to think through the basics. Is the neighborhood you’re targeting appropriate for your concept? What are the demographics and population base? How many customers are reasonable to expect? How much expendable income do people have? Is the space you are considering up to code and will it allow you to run a successful, efficient business?

Another key data point to factor into your decision making, which is sometimes overlooked, is how much support your new landlord is willing to offer. In picking your space, and getting the best deal, there are a few things your soon to be landlord may just not tell you. Here are just a few:

• Sewer hook-ups aren’t always a given. Make sure you ask your prospective landlord how they plan to handle this in the lease. If the hook-up fee isn’t included, that could cost you a hefty fee. So, you’ll want to be sure that they’re offering it to you it as part of the agreement and your landlord will be paying for it.

• Soil contamination might be present. Your new landlord may not be honest about telling future tenants about this issue and a multitude of problems could pop up when you start digging for the plumbing installation if there is any soil contamination present.

Installation of a fire shaft might be covered by your landlord. Keep in mind, your landlord might be able to pay to install a fire shaft. If so, however, they’ll also make the call on what type of exhaust hood is allowed in the space.

Union-only contractors may be required. If the building you are considering is Union, it means that Union-only contractors can only perform any work that is needed. This is usually the case in more established spaces. Keep in mind that the use of union contractors can be required in places like downtown San Francisco.

• Trash enclosure fees can be part of the deal. Sometimes you can negotiate for your landlord to cover the trash enclosure cost if they always intended to have restaurants in their space.

It doesn’t hurt to ask for your landlord to cover utility upgrades. Being thorough in evaluating everything your landlord is offering also includes any upgrades that could make doing business and your life easier. Remember – you’re bringing value to their location by opening and running a successful restaurant.

Construction and utility upgrades should be off the clock. Construction and utility upgrades can take anywhere from three months to an entire year. During this time, you should not be paying rent. As in any construction or upgrade situation, inspections and other requirements can hold up the process – you should not have to pay for these. Depending on the city and space you are in, landlords can be understanding that the process is sometimes less than predictable, even leading up to the final days before your space is scheduled to be open and ready for operation.

Your landlord will thank you for making upgrades for ADA compliance. In many cases, landlords are open to having tenants make improvements to restrooms or parking that will make your new location more ADA compliant. In fact, landlords have been known to even give tenants funds to cover such improvements and you can negotiate this as part of the package.

• Parking lot improvements are the responsibility of the landlord. Changes to the parking may be something the city requires upon you taking over the space. If so, keep in mind that your landlord is responsible for any changes to parking that need to be made.

So, before you meet your landlord at the bargaining table, make sure you investigate exactly what is and what isn’t part of your agreement. By talking through these details at the onset of your negotiation process, you’ll not only know what you can expect, but you’ll have what you need to create the best foundation for launch.



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