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Wednesday, September 13, 2017

Commercial Development Hits Westchester

What factors should I consider before signing a commercial real estate lease?

As New York City prices continue to climb and real estate becomes sparser, developers are expanding outside the City.  Westchester County is the newest target for investors, attracting a flurry of new businesses, ranging from restaurants and stores to theaters and a brewery.  Several multi-million dollar projects will bring a host of new residents to Westchester. If you are a developer or entrepreneur looking to enter the Westchester market, consider some of the following factors you should weigh before signing a commercial real estate lease, as offered by our Staten Island real estate lawyers.  

  1. Read the lease in its entirety.  Commercial leases can be quite long and will contain complex legal terms. You may be tempted to skim the document and rush through with signing, but doing so could be a costly mistake.  You must read the lease in its entirety. Make sure you understand the key terms.  Check to see that the terms you agreed to are written correctly in the lease.
  2. Consult with a real estate lawyer.  Given the complicated nature of commercial leases and the serious, multiple year obligations they impose, it is critical that you consult with a New York real estate lawyer.  Your attorney will closely review your lease to ensure you are agreeing to the strongest terms possible.
  3. Negotiate the best deal.  Just because you have the lease in hand, it does not mean that negotiations are over.  Up until signing, the terms of the lease are still negotiable.  Use your bargaining power to secure the best deal possible.  This could include requesting a lower rent in exchange for taking less in tenant improvement dollars, or asking for a CAM Stop lease in exchange for a higher base rent.  Your lawyer will help you through negotiations.
  4. Understand your financial obligations under the lease.  By signing a commercial lease, you will agree to pay a set rent along with your share of CAM and property taxes for several years.  You will need to ensure you understand the full extent of your financial obligations before committing to anything.
  5. Avoid a full personal guarantee.  Many landlords will request a personal guarantee, rendering you liable for your business’s debts if the business fails.  You can attempt to negotiate to escape the need for a personal guarantee, or minimize the length of the guarantee.  This could save you significantly in the long run in case your business does not work out.  

 


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