Finding the perfect location for your jump center may take some time. For most people, this process will take a few months, in rare cases it can take up to a full year. The facility you select for your jump center will make a huge impact on how profitable your business will become. Choosing the facility wisely means weighing out the benefits of a favorable location against the monthly lease terms and payments.

When leasing a space, make sure you have a knowledgeable commercial real estate agent, and don’t be afraid to ask questions about the facility. Once you’ve found the right space you will begin the negotiations with the landlord. Here’s what you need to know about negotiating a commercial lease:

1. Know How Square Footage is Calculated

Rent is calculated based on the square footage of the facility. What you may not know, is that most landlords measure square footage from the exterior walls – this may include unusable space, any obstructions, pillars, etc. Make sure you’re not paying rent for space you can’t use.

2. Negotiate the Facility Build-Out

Landlords like long-term tenants, so the longer the lease you will accept, the more concessions you may be able to negotiate in terms of build-out or other costs. Before you decide on a facility that requires major construction and improvements, try to find one that accommodates most of your needs in the first place. Build-out can be expansive, to avoid some of the costs, consider doing some smaller repairs and upgrades yourself.

Also pay attention to who owns all fixtures and furnishings, generally it’s the landlord. If you end up paying for the addition and installation of a HVAC system, make sure its noted you own it and can remove it, when your lease is up.

3. Negotiate a Rent Abatement

A rent abatement is a period of time, at the start of a lease, when you get to use the facility rent-free to get the ball rolling. This gives you some breathing room, and lets you focus on running your business without worrying about the rent payment. This period of time will vary based on the size of the facility and the length of lease you’re willing to sign, but on average 3 months is a great start. In fact, even one month is better than none, so make sure you ask.

4. Negotiate a Discounted Initial Lease

If you can’t get a rent abatement, negotiate a discounted rate for the first few months, up to a year – again, this will depend on the length of your lease agreement.

5. Obtain Sublease Rights

If you are not going to use all the space, obtain the right to sublease. In our case, a church approached us about using our jump center facility on Sundays before our regular business hours. Later, that same church decided to sublease office space from us, which we were able to do with no problem.

Another term you may hear is the assignment of your lease, where you can vacate the building and someone else takes over your rent payments – not many landlords will agree to this, as they want to be the ones to approve of the new tenant.

6. Bargain for Short Initial Lease

If you’re not 100% certain of the location, a good solution is to bargain for a short initial lease with one or more options to renew. Typically, an option to renew gives you the right to exercise your option to stay by notifying your landlord in writing a certain number of days or months before the initial lease period expires. Of course, all landlords prefer a longer lease. With a short term lease you won’t have as much leverage for negotiations, but you’re also not tied down for the next 5 years or so.

7. Include a Co-tenancy Clause

Say you’re leasing a space in a shopping center because of another tenant that may drive significant foot traffic to your jump center, perhaps a women’s fitness center. What if that tenant closes or moves away? You can negotiate that if an important tenant leaves, you can pay lower rent or leave yourself.

8. Don’t Get Stuck Paying for the Common Areas and CAM fees

Your rent may include a percentage of the common area. Common areas typically consist of bathrooms or a lobby shared by other tenants, mostly inside shopping malls. This is rare in the case of indoor jump centers as most are located in warehouse style buildings; however, if this applies to you, you may be able to get that section excluded from your rent.

These areas are subject to Common Area Maintenance or CAM fees. In addition to rent, you are required to pay a share of the shopping center’s maintenance–landscaping, snowplowing, cleaning and so on. It’s calculated according to how much space is leased. You can prevent CAM charges from soaring by negotiating:

• A fixed CAM rate. Without this, your landlord can increase your share if other tenants leave the center.
• A cap on CAM increases, set at somewhere between 3 percent and 7 percent a year.
• A refusal to pay CAM administrative charges. These fees can be highly profitable for the landlords.

Few more things to keep an eye out for:

• Allowable rent increases (also called escalations) and how they are calculated.
• Will the rent you pay include insurance, property taxes, and maintenance costs or will you be charged for these items separately?
• Specifications and restrictions for signs (size, where you can put them, etc)
• Who will pay for maintenance and repair costs, including the HVAC unit?
• If and how the lease may be terminated, including notice requirements, and penalties for early termination.

Once you have found the right space, your broker will send the landlord a letter of intent, a non-binding document that spells out what space you want and what rent you’re willing to pay. The letter also includes the terms of the lease – these are open to negotiation. The letter of intent may go back and forth for weeks before you and the landlord reach an agreement, so be careful not to become emotionally attached to a property. If a landlord realizes you’re hopelessly committed, he’s less likely to negotiate with you.

Conclusion

No matter how good you are at operating your jump center, the amount of rent and the terms of your lease can have a crucial effect on your success. Therefore, when you are considering leasing space, you should consult with an attorney or real estate broker who has experience representing tenants before signing a lease agreement.