How To Spot Key Elements in a Commercial Lease: Parking

Hey everybody, Joseph Gozlan with Eureka Business Group again. And today we’re going to talk about key elements in commercial real estate leases. And we’re going to make a series of videos out of that one. And today we’re going to talk about one of the most underrated things in commercial real estate, in my opinion, and that is parking.

A lot of people overlook the parking situation and it gets really complicated later and comes back to bite them. So, why is parking so important? When you go to lease a commercial space, let’s say retail, industrial, office, it doesn’t matter, you’re a doctor, you just got a new office. The city is going to have zoning restriction and the city is going to have usage restrictions and depending on the usage of the space, there’s going to be certain Minimum parking requirements.

So, for example, every city is going to be different. They’re going to have their own rules, but let’s take, for example, retail might say, okay, if it’s a retail store, I want for every 200 square feet of space. I want a parking spot. So if I’m leasing 1000 square foot. And for every 200 square foot, I need a parking space.

I need 5 parking spaces available. And how do they determine available? The city has a list of all the tenants in every building, and they do the math and add up how many available parking spots the entire building has. And how many parking spots have already been accounted for by the usage that’s in the system.

So. Shopping center that has. let’s say five spaces of a thousand square foot. They’re all used as retail. That’s five times five. I need at least 25 parking spots in for the entire building. If I don’t have 25 parking spots, I got a problem. If I have exactly 20 parking spots, I’m good, but let’s say 1 of those tenant decides that they don’t want to do a regular retail store.

They want to do a restaurant. And that city in that specific imaginary case, we’re talking about has a rule that says we need. Parking spots for every 100 square feet of restaurant. Now, that restaurant requires 10 parking spots, and instead of needing 25 total parking spots, I need 30. I know it sounds a lot like math, but that’s what every city does.

And if the building does not have enough parking spaces for your usage, as it adds up all the usage of all the other tenants, you will not get a certificate of occupancy. So how do we solve for that? First of all, a conversation ahead of time with your broker to them, understand your tenant representative, help them understand what.

Your usage going to be so they can check with the city. What is the requirement or you can check with the city? What is the requirement for parking spaces? That’s going to help a lot when they go and talk to the other side that the broker that represents the landlord and ask them, we want to do this usage.

Is there enough parking spaces? Some shopping centers or retail spaces or industrial spaces are going to be very easy. Look, there’s a ton of parking spaces. We don’t have a problem, but some of them are going to be very tight on parking spots, which could cause some challenges. And I’m talking from experiences.

I’ve had multiple situations where. A parking situation caused us to not be able to secure a lease and I was on both sides of sometimes I represented the tenant, sometimes I represented the landlord. And it was a challenge. So understanding the parking requirement of the business that is trying to secure the lease, understanding the parking situation and the tenant mix that is already in the building is going to be critical and very often overlooked by both sides of the transaction, which then comes back to, we signed the lease, we paid the deposit.

Sometimes we even started doing work on the space. And then the city came back and told us we can’t give you a C. O. A certificate of occupancy. So definitely something to consider. We’re going to have a complete series of key elements in commercial real estate leases that we want to pay attention to because we get those questions often brought from our landlords that we represent or from tenants that we help secure leases.

We decided to create this series of videos talking about key elements in a commercial lease. And stay tuned. We’re going to put a link to every one of our series in the bottom of the video description or in the comments below. And we’re going to talk about those key elements that are important today.

We started with parking, but we’re going to talk about renewal options. We’re going to talk about usage restrictions. We’re going to talk about guaranteeing the lease and so on. So, get back to us if there’s any specific topic you would like us to create a video on, let us know in the comments below. I’m Joseph Gozlan.

I’m with Eureka Business Group. We are a commercial brokerage and a commercial property management in the Dallas Fort Worth area. Eureka! Feel free to reach out to us if you need any help or if you need to find the lease or to manage your shopping center. We’re here to help all of our contact details will be below.

Thank you. And we’ll see you soon in the next video.