rent increase

[froggy]

What is normal and customary for yearly rent increases out there? Is it, generally speaking the CPI?

[Burley]

The rent I am looking at has increases of 3% or CPI.

[StoneColdKiller]

The lease I signed 3 1/2 years ago included a fixed bump every year at 3%. I was wary of such an increase on a laundry, but in my market it seemed as fair as it gets. I can tell you going into my 4th year I am not happy with the increases in my rent and CAM. My revenues are basically the same as 3 years ago. As a matter of fact they have somewhat declined due to increase competition but that is another story. The bottom line is in a competitive area the 3% might catch up to you if you are not careful. There seem to be alot of people out there that actually managed to get increased deferred for 5 years or more. That sounds like a winner to me. Incidentally my laundry does quite fine, but I will have a long meeting with the landlord after year 4 to renegotiate the lease or inform him that I am selling. I am an excellent tenant and intend to impress him upon the fact that the next owner will absolutely not be able to run the shop like I do, there by costing him more money in the long run. Either way I am ok as my time can be spent elsewhere just as profitably.

[froggy]

Thanks so much guys, i'm lookin at 1.25/sq. ft. + 5% increase per year, and I thought that was crazy high for a depressed area. sounds like I was right!

[Laundry_Mike]

$1.25 a square foot is unbelievably crazy low, dirt cheap, (almost free), even in a depressed area. My lease allows the landlord the option to increase my rent to a maximum of 5% a year.

[neal]

mine goes up every 5 years at 15% max

[JamesD]

Mike,

I think that he's quoting $1.25 a month / sq ft not a year!

[froggy]

Yes $1.25/sq. ft. per month

[froggy]

So that's three percent right? that sounds a whole lot better than 25% in five years.

[ThePoetSuede]

I am about to sign a lease in Manhattan for 1800 sq ft @ $1.25 sq ft @ month with 2% increases annually.

I asked for a 15 year lease with a 5 year option. So far this is my best deal around. Other places I looked at were talking $2 sq ft per month.

[froggy]

How can it be so cheap in Manhattan?

[ThePoetSuede]

Persistance & luck.

I had been looking for a space for some time. I came upon a "misused" space which screamed potential.

The bottom line, you should know the area you're looking into and get a feel for the mats in that area (online telephone guide with mapping features can help). For me if I saw too many mats clustered i simply didn't bother. If I could only find (1) or (2) mats then I would circle that area and do a drive through to really see its potential. (A lot of 2am scouting).

Again, I was persistant and lucky. I have another spot in the Bronx which screams success but I am working out some details with the landlord. That may be available next year but i don't know the rent on it.

Hop in your car and look for those underdeveloped areas. The ones with potential.

Where are you located/looking?
Manhattan, NJ. (I have a couple of other good looking locations in the NY area.

[petefritz]

CPI increase is the best way. I had a mat with 5% bumps, I stopped paying them after 3 years, as CPI was about 2 %.
An old lady owned the place ands was afraid to kick me out, she needed the income. Now I pay CPI to her and I FIGURE the increase.

At another mat I did what you just said, told the owner his rent to high, increase to much. I am a great tennant, invested in the place, fixed it up, etc. He lowered the rent $8.50 a month I was looking for about a $150 decrease...........good luck! I am selling that one first!

[ThePoetSuede]

What is CPI?

[StoneColdKiller]

http://stats.bls.gov/cpi/

[froggy]

ok so... below cpi = good above cpi = not so good?