OK, where's the Chit Chat Business Group? It's decision time.
Two things at issue but the decisions are rolled into one:
a) expanding one of my stores from about 1950 sq ft to about 2400 sq ft
b) extending my lease beyond it's current date of October 2022.
The new owner has let it be known that as our leases are up, they aren't going to offer the standard 3-5% increase. They're investing $5 million into the building, and rents are going up. They did not want to extend my current lease, but when I expressed interest in expanding and the investment that would go into that, they understood it would not be worth the investment for about a year and a half. New tenants are going to come in at +$6 to +$8 per square foot more than what I'm paying now.
My offer was: Let me take the additional space for the same rate I'm paying now until the end of my current lease, plus the first 3 months free to allow for build out and so forth.
He agreed to that part. That's a win. My rent would not go up too much, we more than double our outdoor window space, we'd have time to make good use of the extra space to hopefully increase sales so it pays for itself (hopefully.)
The rest of my offer was: let me extend my lease up to 6 years after my current lease ends, with annual increases of 3-5%.
He agreed to the 6 years (making us "safe" through 2028.) (Also making me nervous in case there is a downturn in business, but that is what I asked for.)
What he didn't agree to was the 3-5%. After next October, my rent would go +$4 per square foot (less than what new tenants will supposedly pay.) (And then a 4% increase per year "or CPI.") It seems like a lot, but when you break it down monthly, it's not huge. And he had a point: it's unlikely I'd find a space anywhere in the area for what I'm paying now. And this spot is fairly uniquely positioned - not only next to a huge comic book/vintage toy store that's been around for 25 years (we have many customers in common) but also on the site of an old record store (nostalgia factor as well as practical factor.) This store does nearly double what the other store does, and it's not much larger. If either warrants an investment, this one does.
So as much as I'd not like my rent to go up, I appreciate the cooperation for the next year or so (the offer is in fact $300/month less than their original offer until next October, so that's something.) And I think we can swing it and have over a year to grow into it.
The question then (you can all yawn now) is the CAM fee (which covers things like waste removal, etc.) and is almost as much as the rent itself(!!) So I guess I have to nail that down (making sure it doesn't go up and still covers the HVAC - which I've heard they don't want to do anymore.) That may be my last point to negotiate. But I'd really like to do this.
