NFIB California Podcast—Tips for Small Business Lease Negotiations

Date: November 16, 2021

Interview with special guest Ken Noack, senior managing director for Newmark Commercial Real Estate, and one of the state’s most respected land and retail specialists

Commercial real estate is a big issue with small business. In surveys of NFIB-member, small-business owners:

  • 54% pay rent on the building they operate their enterprises from
  • 40% own the building
  • 79% pay rent or pay a mortgage on the property they use for business purposes.

So, what does the commercial retail landscape look like as we slowly come out of the pandemic? To help answer that, NFIB California invited Ken Noack to give his observations on the latest NFIB California podcast.

Noack is the senior managing director for Newmark Commercial Real Estate and one of the state’s most highly regarded land and retail specialist. Prior to joining Newmark, he had been affiliated with Sacramento-based Grubb & Ellis for 17 years and Camray Commercial for13 years, where he was consistently recognized as a top producer. Along the way, he developed production housing, mini-storage, warehouses, retail, and office projects throughout Northern California.

“As far as short-term leases, businesses have more leverage over landlords, yes, there was some of that,” said Noack when asked by NFIB California State Director John Kabateck for some of the trends he sees, “but a lot of it was actually restructuring, a significant amount of restructuring that went on particularly in the leasing market where tenants couldn’t pay the rent and either deferred rent and amortized it over the following calendar year or deferred rent and tacked it on to the back end of a lease and extended the lease term, and various types of creative formula like that to help the tenant get through, because it’s a whole lot easier to work with an existing tenant that’s been successful than it is for them to fail and have to out and re-lease the space.

“First and foremost, be honest, and secondly, be preemptive. Don’t wait until the last minute to work to renegotiate a lease. And when you go in, be sure to have all your facts: your sales numbers, your gross receipts, all of the economics that would affect and justify your request to get a rent reduction, or whatever it might be when you meet with a landlord. You will find that landlords are very receptive to working with you if you’re honest with them, if you approach them early on, and if you have all your facts in black and white on paper that you can present to them unequivocally that justify the need for assistance.”

As for a new lease, some things will never change. “Brick and mortar will never go away because people like the shopping experience,” said Noack. “When negotiating a new lease so much of success is location, location, location.” At the 12:25-minute mark, Noack details the things to look for when negotiating a new lease.

Click the arrow below to listen to this highly informative podcast. You can also find all of NFIB’s prior podcasts at this link.

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NFIB California thanks Five Star Bank for its generous support of this podcast

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