My landlord in my strip mall just sent the new lease for my store and it's a 25% increase.

Call the bluff.

Commercial occupancy rates are at an all-time low.

That 25% is paying for others who moved.

Mani-pedi in the front, rub & tug in the back.

Trump's fault.

OP, first tell us about your business.

What are we selling? Fiesta seconds? Poodle trims? Intimate bleaching?

'Dear scum sucking leech on society, I hope this email finds you well'

It's a Little Debbie Snack Cake boutique. I sell nearly all of the varieties of the snack cakes I specialize in the especially hard to find cakes. The holiday themed one are my biggest sellers. You have to get on the waiting list as early as August for those. I was the only one in my tri-town area last year that had the red velvet cake line. It might surprise you that the hardest to get is the Little Debbie Spin Wheels.

[quote]It might surprise you that the hardest to get is the Little Debbie Spin Wheels.

No, OP, I saw that coming from a million miles away.

My first thought is that 10% should be adequate revenue for the landlord.

Get a real estate attorney to write your response. You’ll be glad you spent the $350.

That's if the attorney will consult with you and then write a letter, all for $350.

R4 actually had one of their guesses correct.

OP, sorry. Your store is being replaced by the Tina Turner Wall Clock Store.

[quote]Commercial occupancy rates are at an all-time low.

Agreed.

Also, who signs commercial spaces leases for one year. That's ridiculous. They're usually five year leases although they may have rate escalations baked into the agreement.

This is a great opportunity for you if you move.

You have two events - leaving beloved location after x years (this is where you dump underperforming product) and the GRAND opening of the new location with special capsule product/services available.

Threaten to move if the landlord doesn't LOWER your rent rather than raise it.

Get a lawyer to write it.

R14 has the right response. It's difficult to see something like getting an unduly burdensome rent increase as an opportunity, but experience proves that there are benefits to nearly every setback. If you haven't begun a search for new space, do so now and before responding to your current landlord. You need to know the state of the economy and rental market in your location before proceeding. Vacancy rates are high and many landlords are offering incentives; I saw a retail space listed last week in which the landlord is willing to offer 3 months free rent plus either buildout or an allowance with a lease term as short as three years (granted, it was not in the best location, but does already have a popular furniture store occupying half of the ground floor, and the second floor office space is 80% occupied).

Arming yourself with this information and then approaching the landlord with the fact that he'll be sitting on a space that will remain vacant for at least the remainder of the year may sway him to be a bit more reasonable about the immediate rent increase.

Try giving him more praise, OP.

Are the other tenants facing the same increase? Is there a chance the landlord wants you out to attract different types of tenants and clientele?

Check the lease agreement. There might be a clause in it which caps the amount of rent increase to a certain percentage.

Some options you might propose are a multi-year lease with an escalating rent structure (5% this year, 7% next year, etc.); a seasonal rent structure where you pay more during your peak season; a base rental plus a percentage of receipts; a reduced or flat base rental in return for you taking on some of the upkeep (shovel the walks, plow the parking lot, mow the grass, maintain planters, etc.)

This is what happens when you let a doddering old fool like Biden run the country. Get rid of him now!!!!

Ask yourself a few questions... is he trying to get you out because a store on either side wants to expand but he can't break the lease? What else might be at play? I would definitely start shopping around for new locations and call his bluff. A 25% increase now into the future will be costing you more money forever.

Are you really lil Deb’s shop? Where?! Would really like to know.

We're literally the best, most stable spot in the strip. We've been here forever, the first tenants to sign a lease on new construction. We pay the fucking property taxes, a fee for grounds keeping, utilities (including buying a commercial rooftop air conditioner that is worth more than my car) and our rent on time. I really don't have it in me to move tho

Yes.I was also curious what you sell?

OP is running a pet salon

Yes, Dutchie and pet supplies, altho Amazon addicts are killing us there too, but I have a big base of loyal customers and we're still growing every year.

What's the name of your store, OP?

Spin wheels !!! Well knock me over with a Hostess Snow Ball!

R25, are you paying the property tax and landscaping fees in addition to your rent? If so and you paid for a physical investment in the property like a A/C unit then they are probably gouging you because they think you’re able to be gouged. None of those things you say you pay for are things a typical retail space leasee would pay for.

They are typical when the least is triple-net, R31. Not unusual, actually, and becoming more the norm every day.

Almost all commercial leases include expenses on top of rent payable by tenants. Those include taxes, landscaping, fire protection maintenance and services, and other maintenance costs for the property. Talk to your Broker to negotiate with the Landlord to get better term, rates and future options. A 1-year renewal at 25% is a bit nuts. I would not suggest a percentage of sales lease. Fight for a 5-year lease with 3% cap on year to year increases for rent with a 5% cap on expenses year over year. Any LL would be happy with that. If not something is amiss.

[quote]I really don't have it in me to move tho

Sounds like your landlord knows that and is taking advantage

It’s neither little Debbie’s nor pet supplies-We specialize in the International world market of brands and variety’s of Kotex. It’s called ‘’Kevin’s On The Rag’’

That seems a lot for a strip mall. I could understand it if it was in a large, busy mall.

Hell, these days many people would just move and then come back and set fire to the place.

R33, I could understand NNN leases for single occupancy buildings but a strip mall? Are the landscaping fees and insurance/tax prorated by square footage? I guess since the store would have a separate address the tax and insurance could be split easily enough, but it doesn’t seem like a good fit.

Usually a triple N lease has an earning cap which controls how much the rent can increase, so this lease. Which sounds like it doesn’t have one, is mostly all win for the property owner and lose for the tenants.

R38, while most retail leases have specified rent increases each year during the term (and perhaps an option for the tenant to extend for a certain number of years at specified rates), this sounds like the term has expired. Therefore, the rent would be whatever the "market" determines it would be and can be negotiated between landlord and tenant. In my market (Chicago), rents wouldn't be shooting up 25%, In fact, Chicago Loop tenants are often getting rent decreases from a few years ago.

Will your landlord accept other forms of payment, like a monthly blow job?

Have you obtained comparables on similar properties for lease in the area? If they're lower, that would be your best ammunition.

Are you Saul Goodman?

Is this even legal where you live? This would be an excellent time to involve a lawyer.

Triple Net leases are becoming more and more common everywhere regardless of the class of property. Yes, it is done by square footage (just like the rent, usually) and stated when you're negotiating a lease with the provision that the expenses change (go up) so it's recalculated annually. They can be quite the trap for tenants, and since we don't regulate commercial property in any meaningful way, can be very costly for tenants particularly when there's any major problem with the building.

I have never seen a triple net lease with an earnings cap, R38. And yes, they are all-win for the landlord since it largely moves all of the costs and risk associated with running the building to the tenants. The first time I encountered a NNN lease many, many years ago, I said to the agent "you'd be crazy to sign this lease! You have all of the financial responsibility for the building without any of the benefits of ownership." She agreed and said we should all be buying commercial buildings.

I hope a Precious Moments figurine boutique goes into your store when you move out.

[quote] I really don't have it in me to move tho

So....you want to set money on fire instead?

If you are renewing year-to-year, be prepared to pay 20-25% more, at the current market rates. They will charge you more if you're not going to commit to a long-term lease. If you plan to be there a while, you should seek a 10-year lease, with base rent fixed for the first 5 years, and a 5% increase for the 2nd 5 years. This is very common in retail & commercial space.

These rent hikes I hear about are outrageous and should be illegal. Commercial real estate greed at its worst.

Where are you, OP?

We specialize in pet wigs and pet merkins.

Hopefully you have a street corner near your store. Make some extra cash.

As a former small business retailer, I can tell you something went wrong from the beginning.

If you're in the same spot year after year, you don't get a 'new lease' with 'new rental rates'. You keep your old lease and just renew. And the renewals should be a 2 -5% increase each year, hammered out years before.

[quote] It's a Little Debbie Snack Cake boutique.

Sounds like something that could easily be managed as a home-based business out of one's carriage house.

Gentleman callers could schedule appointments for more personalized service in the salon.

People enjoy the in person experience of shopping for their Little Debbies. What really ticks me of is it is such bad business on his part. There is a vacant store space next to me. I was planning on renting that too and opening my Gravy Boat Boutique. Screw him now.

Work on your business instead of crying poor.

Move. Fuck ‘em.

When did you purchase the air conditioner, OP?

The air conditioner is approximately 3 years old. And we signed 5 year leases. It's always increased 2-3% and I was prepared for that with this latest one. Looking at comps, this new rate isn't comparable. With the CAM I'm looking at 35 bucks a square foot. Nearby places are around 25 and have better anchor stores.

Then it's a no-brainer. You'll save in rent the costs to move in six months or less depending on your square footage, and have the promotional opportunities R14 listed.

Do folks remember the "Once Around the Garden" vs. "Autumn Harvest" restaurant proprietor? Yeah, I figured out the business.

This is what he replied back to me.... We send these numbers to the rental company every month btw...

"The market for retail small shop space has increased dramatically and this is now a “Market Rent” particularly in this submarket.

Providing your monthly gross sales numbers would greatly help if you wish to counter the proposal."

Funny I had a landlord who asked me to strip

OP/R60, it's good to see he clearly expects you to counter. I would look at your sales numbers for the last few years and "cherry pick" the ones that look best for you to prepare a response. For example, if your highest sales were two years ago and have suffered a decline since that time (or have increased but only slightly), use those numbers to make a counter proposal. "Due to the current economy, my gross sales have declined 4% since November 2022." And toss in anything you know from friends with other businesses in the vicinity to counter his "market for retail small shop space" - I'm betting that's bullshit.

Why does the landlord need to know anything about sales figures?

Have you looked at other possible units? If you let him fuck you over this year it'll be the same every year.

R63, it's common for tenants to provide (or even to be required under a lease to provide) their sales information, particularly if the tenant is seeking "relief" from current rent or from a future increase in rent. If the landlord is saying the market rent in the area for retail tenants is higher than the tenant is paying, it's reasonable for the tenant to say "my business is off 10% since the pandemic and here's proof - so you'll have a tough time finding a new tenant to replace me at 25% more rent".

I replied "I guess I don't understand what our sales have to with our rent, but we email that information to you monthly at ....." and he said "Thank you, will be countering our offer?"

Thanks for all of your insights everyone. AAAAAnnnnnnd I'm working on an email now, but it sounds so rambling.

chatgpt

OP, have you looked at vacant nearby units? How do they compare to the rent you're currently/being asked to pay?

Commercial property rent usually goes by $-price per square foot and what the current comparables are for the type of unit/building in a particular area should be easy to find (i.e. Property Shark) or just call a realtor who specializes in this. .. btw - The fact that the space next to you is vacant might work in your favor. Once a strip mall starts losing tenants, and more than one unit goes dark doesn't help the other businesses and makes the the whole place start to look uninviting.

Check Loopnet dot com. For some reason Muriel won't let me post the link.

how many 'rump threads did you start today, r70?

oh, idk!

bwahhhh!

Jason/OP, I’ll speak to your mother and see if I can’t get her to go lower.

Send his new lease back with a decimal point between the 2 and the 5 along with the notation, "Corrected that for you. You're welcome."