Before You Negotiate Your Bar Lease

When you were first dreaming of owning a bar, your dream probably did not include the section where you took all the necessary steps to make sure that you got the right bar or nightclub lease. But getting the right bar lease is vital for anyone who wants to have a successful bar. Making a mistake in your lease could end up sinking your dreams or so handcuffing your possibilities that the bar hardly feels like your own.

Leasing a Bar or Buying It?

First things first. You may want to consider just outright buying the building that contains your bar rather than trying to get a landlord to agree to the terms you need for your pub lease. Owning a bar and the building it is in is certainly much cleaner than having to deal with a landlord. Owning a bar in totality will certainly give you much more freedom and control in terms of bar design and build-outs.

The main drawback to owning a bar and its property is in terms of upfront costs of course. Raising this kind of capital can be difficult for many first time bar owners. In addition, if you are a first time bar owner, a bar lease decreases your risk should you not turn out to be cut out for the bar business, or should you make critical mistakes on your first time out.

In many cases, you may have no choice for a particular property.

Tip from the Pros: Get a Professional Real-Estate Broker: As you will see, there are many considerations when it comes to working out bar, nightclub or pub lease details. From early on in the process you should hire a professional real estate broker who has experience with restaurant or bar leases and completely acquaint them with your bar design ideas. It is important that they are experienced because a general commercial real-estate broker simply may not know the special needs that a bar or nightclub lease will need to secure to operate successfully and the broker may not be able to make sure you get these needs met. If you are buying into a bar franchise, they may provide a real estate consultant for you. As always when hiring anyone, be sure they have your best interests in mind and are not just looking to making a quick buck at your expense.

Evaluating the Lease Location

Photo courtesy of Daniel Lobo (via Flickr)

Even before you begin haggling over the lease, you need to do your homework so that you can have a clear sense of the value of the location. This is important because it will determine how far you are willing to go in leasing the bar or nightclub location. One of the big mistakes that first time bar owners make is jumping into what looks like the “perfect location” without doing the proper research.

Some of the things that you will want to consider about the location:

  • Visibility and Foot Traffic: How visible is the location and how close to other entertainment spaces. A bar right by the Walk of Fame on Hollywood Blvd. is likely to be able to attract tourists and other night time revelers without any difficulty. But if your location is just a block down from the main drag, you might need a bit more marketing. Take these extra costs into consideration when evaluating your lease arrangement.
  • Parking and Transportation: If you get a lot of foot traffic at you location from other entertainment destinations then transportation concerns might not be an issue. However, if people need to drive to your location, you must think about where they will park. If you are in a financial district, do the parking lots stay open late into the night? Is it feasible for people to take public transportation at night time, during your peak hours? Will they do it? In some cases, you may need to work out these nighttime parking arrangements (sometimes even pay for a late night parking attendant) in order to have accessible parking. Find out before you negotiate the lease.
  • Bathroom Facilities: If you are leasing a bar in a building with shared bathrooms, you need to make sure that these will be available during nighttime hours.
  • Kitchen Needs: If you are going to open a Bar and Grill or any kind of bar or pub with kitchen needs, you need to make sure the location has the proper ventilation and facilities for a kitchen. Many locations will have to be modified to handle kitchen needs. Find this out, and make sure that you know exactly what modifications you will need to make before you negotiate your bar, club or pub lease.
  • Plumbing and Electrical Upgrades: Be sure to determine what kind of upgrades the location will need before you can get fully operational. This should be factored into your financial considerations.
  • Space Redesigns (Build-Outs): Determine whether you will need to do major changes to fit your club or bar design. Will you need to tear down walls to create new spaces, for example. All of this goes under the general category of what are called “build-outs”. Build-outs involve everything from changing the flooring to adding outdoor awnings and attaching signs to the outside. Determine which build-outs you will need to do and make sure you get these build-outs approved in writing long before your Grand Opening.

Tip from the Pros: Interview the Other Tenants: Before you even begin negotiating your bar lease, you should get a good feeling for the landlord. One of the best ways doing this is to interview the other tenants with whom you will share the building. Find out what they think about you leasing a bar or nightclub in the same building. Find out their concerns about noise and security and try to set their minds at ease. But even more importantly, find out about the landlord. Does the landlord help businesses succeed? Is the landlord flexible? Does the landlord take a hands-off approach but expect tenants to fix all problems that may arise? Does the landlord respond to tenant problems in a timely manner? Does the landlord try to micromanage everything that goes on in his or her building from the changing of a light bulb to the number of keys allowed? These are huge considerations when it comes to deciding whether a bar or nightclub lease will succeed.

Only once you have completed all of this are you ready to get into serious bar lease negotiations. With this information and the help of a real estate professional who specializes in bar, club and restaurant leasing you will be able to come to the table fully prepared to get what you need. Furthermore, by being prepared you will make it clear to the landlord that you are actually ready to take on the complications of the bar or nightclub business and will thus set the landlord’s mind at ease as well.

Filed Under: Bar / Nightclub BusinessBar / Nightclub CostsBar / Nightclub DesignBar BusinessNightclub BusinessStarting a BarStarting a NightclubStarting Your Bar/Nightclub Business

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