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earth2table: Warning, Will Robinson!
September 1, 2006

Stu Stein

September 1, 2006
And now for the ever-exasperating, sometimes rewarding, usually confusing and always necessary area of lease negotiations.

Several years ago, I went through the experience of building a house on a piece of land we purchased in southern Oregon near my previous restaurant. At the time I thought it was one of the most frustrating experiences I’ve ever undertaken. The words “contractor” and “change order” were forbidden to be spoken in my house for a long time.

Despite what some of you may think of real-estate people, I actually like my commercial real-estate agent. Michele Reeves from Windermere Real Estate is THE person to handle commercial real estate in the north/northeast Portland market. Catch 22: She’s acting as agent for me, the lessee, as well as for Ben Kaiser, the developer. It works to my advantage by giving me the ability to do some “recon” behind enemy lines and find out what is and isn’t important. It’s a disadvantage because it begs the question of whether she is really acting in my best interests.

The biggest fight I seem to be having with the other side of the table is over sustainability issues. Incorporating additional energy-efficient, sustainable and convenience features during the construction period poses a dilemma. I already negotiated some tenant-improvement dollars/developer construction for some things: chases for both my hood-exhaust systems, some plumbing rough-in and various build-out pieces to turn the basic retail space into somewhat of a restaurant-ready space (proper restaurant electrical panels, HVAC specified for our size space and loads, etc.)

Being new construction, the dilemma involves who is monetarily responsible and whose contractor is responsible for the various rough-in components (computer, phone, security system, HVAC ducting, etc.) before the walls are sealed.

One example: We are trying to decide if a radiant floor-heating loop near the window areas (which take up two complete walls of the restaurant) is energy efficient, cost efficient and just plain toasty enough for your toes on cold days. The problem is that the developer is responsible for pouring the concrete slab, which we will have polished later to make the final floor. My contractor will have to coordinate with the developer’s contractor. This is something developers do not want to do. Now multiply that situation with things like wiring, plumbing and anything else you want to have control over or may change as construction is ongoing.

A second example: Terroir is sharing bathroom facilities with the adjacent retail space. I’m allocated half of the cost of the square footage on a monthly basis in my lease payment. My architect had the idea of pushing the bathroom facilities out of our space (giving me more space for seating and back-of-the-house space) and designing a common hallway accessible by both spaces.

I say the developer should pay for the fixtures and build-out because it will benefit more than just Terroir. Being the megalomaniac that I am, I want to have control of the fixtures, ambience and design of the facilities. Questions: Who is responsible for the actual build-out, will I get reimbursed for the additional cost of sustainable fixtures, and can I wire the bathrooms to play CDs of Julia Child reading her recipes?

What all this boils down to is that architect Kelly Edwards and I need to complete the entire design and the itemized build-out costs so we can put a dollar figure on the additional work I will be doing but the developer will be paying for. And the journey continues.

Cheers!

Stu

Posted by Stu Stein on September 1, 2006 | Comments (0)