Small Business: Commercial Leasing in Historic Corridors

Negotiating a commercial lease in a historic shopping corridor can be challenging but rewarding. Here are 10 tips for small business owners to navigate this process successfully:

1. Understand the Market
   Research current market rates for similar properties in the area. Historic districts might command higher (or lower) rents depending on the tenant mix, uses, condition of the building, the charm and foot traffic, so be prepared for this. 

2. Leverage the Historic Appeal
   Use the unique aspect of being in a historic area to negotiate better terms. Highlight how your business will contribute to the preservation and vibrancy of the district. If your business will drive foot traffic for other businesses, highlight it.

3. Evaluate the Property Condition
   Inspect the property thoroughly. Historic buildings may require more maintenance and have specific restrictions. Negotiate for repairs or improvements needed before you move in. Remember to consider the Americans with Disabilities Act (ADA) and ensure the business shell/location can accommodate customers with disabilities. Clarify whether Landlord or Tenant is responsible for major systems in the space (HVAC, plumbing, electric). Consider an inspection of these systems before finalizing the lease. 

4. Check Zoning and Restrictions
   Verify that the property is zoned for your type of business and understand any restrictions related to operating in a historic district, such as signage, exterior modifications, and hours of operation. Evaluate parking availability and explore the possibility of reserved parking for your business. 

5. Negotiate Lease Length and Renewal Terms
   Aim for a balance between security and flexibility. Longer leases can provide stability but try to include options for renewal with pre-negotiated terms to protect against significant rent increases.

6. Understand CAM Fees
   Common Area Maintenance (CAM) fees can be significant. Clarify what these fees cover and negotiate a cap or fixed rate to avoid unexpected costs. Be sure you understand who is responsible for what type of maintenance. 

7. Tenant Improvements
   If the property needs modifications, negotiate who will pay for these improvements. Often, landlords in historic districts are willing to contribute to or fully cover these costs to attract quality tenants. 

8. Rent Escalation Clauses
   Understand how and when your rent will increase. Negotiate for a cap on annual increases or tie them to a reasonable index, like the Consumer Price Index (CPI). If your lease includes “percentage rent,” make sure you understand how that is calculated.

9. Escape Clauses and Subleasing
   Negotiate for an escape clause in case your business doesn't perform as expected. Also, ensure you have the right to sublease the property if necessary.

10. Legal Review
    Always have your lease reviewed by a lawyer experienced in commercial real estate, particularly with historic properties. They can identify potential pitfalls and ensure your interests are protected.

    By considering these tips, small business owners can better navigate the complexities of leasing in a historic shopping corridor, ensuring their venture is both sustainable and successful.