You’ve been looking for an ideal location for your fitness facility for weeks, months or maybe even years, and now you have finally found your dream location. As soon as you laid eyes on this new location, you immediately begin to imagine packed classes, a strong and qualified staff working for you, and a gym fully decorated to your exact specifications.
But wait! The building is not yours to occupy—yet.
There is probably a big sign on the outside of your dream location listing the contact information of a commercial real estate agent. This is the listing agent who will help you lease the space. If this is the first time you’ve gone through this process, it can be quite daunting, but it doesn’t have to be—preparation is key. The more prepared you are, the more confident and relaxed you can be throughout this entire process.
With that in mind, here are three essential tips for successfully negotiating a lease for your future fitness facility:
1. Find Your Own Agent OR Legal Representation
A common mistake many people make when leasing a building is to allow the listing agent to handle the entire leasing transaction. The listing agent was hired by the landlord, which means that his or her number-one priority is to protect the landlord’s interests—not yours. You need to hire someone who will protect your interests, rather than trying to represent both sides.
If you don’t know any local commercial real estate agents, ask friends and colleagues if they can recommend a reputable commercial real estate agent who can represent you. Another option is to hire legal council to help you negotiate your lease. If this is not your first lease and you feel confident in the leasing process, hiring legal counsel instead of a commercial real estate agent could prove to be a great negotiating tool between you and the landlord. Because you’ll be saving the landlord commission fees by hiring legal counsel instead of a commercial real estate agent, he or she may be willing to accommodate more of your requests.
2. Have a Solid Letter of Intent
The purpose of a letter of intent is to make all of your requests known to the landlord. While you’re unlikely to get every single thing you ask for, this is the time to ask for everything that you want for your potential new fitness facility. Don’t be timid because you never know how desperate the landlord might be to lease this vacant building, which means that they may be more willing to accommodate your requests. You can ask for things such as free rent for a year, reduced rent for a certain number of months, freshly painted walls, assigned parking spots, new carpet, an elevator, new windows, etc. Ask for anything that you think would improve the building for your fitness location.
In the letter of intent, you also need to specify the proposed terms of the lease such as:
- 4 Year Term ($2.00 per square foot – NNN OR Gross Lease) with (2) 4-year options
- Annual CPI Capped at 2 to 4%
3. Think Win-Win
When negotiating a lease, always think win-win and never be greedy. Your potential landlord will expect you to ask for a lot during the negotiation process, but you shouldn’t expect or insist on getting everything that you ask for. Make one list of things that you WANT and another list of things that you absolutely NEED for your fitness facility. Your landlord may agree to all eight of your needs, but to only two of your 10 wants. If this is the case, do you agree to those terms or do you walk away because you didn’t get everything that you requested? Only you can decide, but at the end of the day, only sign a lease that you fully understand from front to back and if you feel 100 percent confident in the decision.
Remember, everything in a lease is negotiable. By following these tips, you will be much more prepared to ask the right questions when hiring your representation and successfully negotiating a lease for your new fitness facility.