10 Key Things To Do When Negotiating Your Lease

by | Jan 4, 2019

7 minute read
You’ve found the perfect place for your gym, now let us help you prepare for the next step: negotiating the lease.

So you found the perfect space for your gym and it’s time to negotiate your lease.

Though drafting up a lease and signing on the dotted line might seem relatively straightforward, small gym owners say there are pitfalls to beware of that you really want to avoid. And ways to save money. If you’re a sharp negotiator, that is.

Here are their best 10 lease negotiation tips:

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10. Push for Upgrades

If you know you’re going to need to make renovations to your new space—or build features like bathrooms—it’s worth it to try to save money by negotiating these costs into your lease. One gym owner we know said he saved $25,000 this way.  

It’s also pushing to include possible future repairs into your lease, such as your heating unit (especially if it’s old). If a heating system breaks and you have to replace it one year into your lease, you’re going to be kicking yourself.

On a similar note, it’s also important to look into local bylaws. Another gym owner said he spent $30,000 on building new restrooms and then the City came in and mandated a handicapped restroom be built, causing an additional $10,000 expense that could have been avoided from the get go.

9. Hire an Expert

Many gym owners say if they were to do it all over again they’d hire a lawyer to look through the minor details of the lease. It’s worth it if it saves you money and headaches in the future.

Often a lawyer will catch things you might not understand or even be aware of. One gym owner, for example, told us he didn’t understand the difference between a gross lease and a triple net lease. (In a gross lease, the tenant pays a set sum and the landlord pays all real estate expenses. In a net lease—referred to as a triple net lease—the tenant pays for the utilities and property taxes in addition to the rent). Needless to say, this gym owner agreed to pay a whole lot more than he originally realized.

8. Read the Fine Print

If you choose not to hire a lawyer to look over your lease, make sure you read the fine print. One gym owner’s landlord tried to build in a ‘personal guarantee provision’ into the lease that would make the tenant personally liable for the remainder of the lease even if the business went bankrupt.

Similarly, watch out for details such as yearly increases. Or at the very least, make sure yearly increases are reasonable, so you don’t end up paying 25 percent more in your fourth year than your first.

7. Hire an Inspector

Spend the money on an inspection to make sure your building is up to your current city codes.

6. Watch Out for Empty Promises

Do your research to make sure what has been promised in the lease is even feasible.

One gym owner we spoke with told us his landlords promised his utilities would be submetered, meaning the landlord would bill the tenant based on individually measured utility usage. Turns out, the building wasn’t set up for submetering setting that up would cost $40,000. Because of this, the gym’s electricity was turned off twice when the landlord didn’t pay the bill.

5. Include Gym-Related Stuff in Your Lease

Include provisions into your lease that allow for things like running in and out of the building, sled pushes, tire flips, loud music, noise, dropping barbells etc.

4. Ask Around

Talk to other tenants in your building, if there are any. Find out what the landlord is like and make sure it’s not going to be a problem if you’re dropping weights next door to another business. If we had a penny for how many gyms have had to pack up and moved locations because of noise complaints, we would be able to pay for a three-year lease…

3. Negotiate When Renovating

If it’s going to take you a couple months to renovate your new space, negotiate to get two or three months lease abatement so you’re not paying rent while you’re upgrading the facility.

2. Negotiate the Back End

Negotiate an option to the backend of your lease. For example, if you’re signing a four year lease, negotiate another two-year extension option to give you the power to stay longer if you want, or exit if need be.

1. Be Smart When Renegotiating

When as lease is about to expire and you’re planning on renegotiating a new lease, start the process early. If you can’t come up with a new agreement, you don’t want to be scrambling to find a new space.

Further, it might go without saying but if you do have a trusting relationship with your landlord, try not to be too trusting. In other words, don’t negotiate anything verbally. Get it in writing right away, and then follow up, follow up, follow up.

Good luck on your lease journey.

Planning a new gym, yoga studio, or martial arts facility?
This article appears as part of our Definitive Gym Startup Guide as a resource for everyone who’s planning to start a new .
For more information and a ton more tips, tricks, hacks, and concepts make sure to read thru the whole guide.