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A Guide for Creating and Preserving Affordable Artist Spaces

Leasing

Artists looking to lease space might find themselves in several different situations:

  1. Renting and working from a house, apartment, or residential loft, which means signing a residential lease.
  2. Renting a studio in a previously developed artist building, which means either subletting or signing a commercial or industrial lease.
  3. Leasing a large undeveloped space for a group of artists which means signing a larger commercial or industrial lease.

Quick Tips on Leases:

  1. READ CAREFULLY – When you get a lease, do not sign immediately -- take it and read carefully, and understand exactly what's expected of you as the leasee.
  2. Get clarification in writing – If you don't understand something ask to have it explained and clarified in writing.
  3. Revisions – You have the right to ask for unacceptable elements of a lease to be eliminated before you sign.
  4. No verbal agreements – Make sure that everything you verbally agree to or are promised is written down and in the document.
  5. Consider a lawyer – It is strongly recommended that you have an attorney experienced in commercial leasing to review the lease and perhaps negotiate for you. Sometimes a lawyer could get you more than you could on your own. Don't be afraid to ask lawyers about their experience with commercial leases and their fee. Some might accept artwork in lieu of a fee.
  6. If you improve the space, ask for a rent reduction – Don't hesitate to propose rent reductions in exchange for improvements made by you to the landlord's property.
  7. Know what needs landlord approval – Be clear about which activities need the landlord's approval, especially when subletting or subdividing a floor. You might want to submit a list of subtenants and a floor plan of the improvements you might make to the landlord.
  8. Sharing a lease – Most landlords like to deal with only one or two tenants at most. Even though it might be ideal to have all the artists named on the lease, be sure that the person whose name goes on the lease can handle the responsibility.

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Residential Leases

If you sign a lease for a unit in a standard residential building (even if it is a loft building) you should ensure it is a bonafide rental live/work space. If it is, it will have characteristics such as:

  • A good live/work building is built to contain sounds and odors within units, and should have provision for adding exhaust systems on a unit-by-unit basis.
  • A good live/work building should have a working relationship with an industrial hygienist who can respond to tenants' questions and can blow the whistle on things that should not be done in a multi-unit situation.
  • A good live/work building should have provisions for disposal of solvents, etc.
  • A good live/work building has durable, cleanable floors in most of the space.
  • A good live/work rental building manages to provide for living basics without using up all the work space – a hard act to pull off well in small spaces.

Neighbors in live/work buildings generally follow the golden rule when it comes to accommodating occasional inconveniences, crowds, or noises. Lease terms are written to allow management to deal with people who egregiously or routinely disturb the other occupants.

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Commercial Leases

Commercial rents are usually expressed in gross square feet per year (usually measured from the outside wall). For example, if the landlord tells you that the rent is $9 per square foot (p.s.f.) for 2,000 square feet then the annual rent is $18,000 ($9x$2000) or $1,500 a month ($18,000/12).

In general, you will hear people refer to two different types of leases:

Gross Lease: This is similar to a lease you typically sign to rent an apartment. A gross lease is a lease of a fixed amount every month in which the landlord covers the majority of the operating expenses of a space (including taxes, insurance, repair costs and common area maintenance costs (CAM)). Utilities may or may not be paid for by the landlord.

Net Lease: Under a net lease, you will be required to pay rent for your space and a certain portion of the operating expenses related to the property. These expenses may include CAM, insurance costs and real estate taxes, as well as utilities. CAM costs may include your share of maintaining the common areas of the building such as the lobby, bathrooms, and elevators for the property.

Net leases may also be known as "double net" or "triple net" leases, with the primary difference being how much of the operating expenses are charged to you in addition to your base rent. In a double net lease (Net-Net or NN), the lessee or tenant is responsible for property tax and building insurance. A triple net lease (Net-Net-Net or NNN) is a lease agreement on a property where the tenant or lessee agrees to pay all real estate taxes, building insurance, and maintenance.

The following is a quick review of typical terms in a lease that you should review before signing. A term is a legal item that you are agreeing to follow as part of you signing the lease.

Premises: The lease should lay out where your space is specifically and also tell you what spaces are common to the building.

Rentable area versus usable area: Many commercial buildings assign a share of common areas to each tenant. Ask if the area of your space is the actual area within the space itself (the "usable" area) or if it is "rentable" space (the usable area times the building's "common area multiplier"). In a building with 20 percent of its space devoted to common areas, 1000 usable square feet may actually be leased for as much as 1200 rentable square feet.

Rent: The rent figure often does not include the full cost of your occupancy. Know exactly what your rent covers. Is the lease gross or net? Will you have to pay utilities? Ask for a definite estimate of the utility charges for the space you are considering, including actual billings for the past few years.

Length of lease: For commercial or industrial spaces, leases are typically two to three years, and possibly up to five or more years. You might want to go for as long as possible if you are planning on staying for a while and you like the space. Remember this is a legal obligation to pay for the length of time you sign for. You can also try to get an option to extend the lease if you want to. Be aware that even if you move out, you must pay the rent unless you can legally transfer the lease or sublet to someone else, called an "escape clause".

Subletting: Be sure to insist as part of the signing of the lease that you can have permission to sublease for specific categories of tenants in advance (e.g. other artists).

Cost of living adjustments: If this is in your lease it means that your annual rent might increase. Be sure you understand the formula that is laid out in the lease. These might also be tied to increasing operating costs.

Insurance: Liability insurance is often required and can be costly.

Fuel operating expense and tax increase adjustments: Be sure to read this section carefully and review it with the landlord until you understand it. There might be hidden costs here. Write down your understanding of it and have the landlord sign it, especially if the lease is not clear.

Improvements: What improvements or repairs are needed and who will pay for them? Note everything that needs to be repaired/improved and identify which party, yourself or the landlord, will be responsible for the improvement before signing the lease. If improvements are needed, payment of rent should commence upon the completion of the work. Be sure to know which fixtures belong to you when you move out.

Living in a work space: A commercial landlord cannot legally sign a lease that allows a tenant to live in areas that do not comply with the residential building code or which is not zoned for residential use. It is possible to incorporate into lease permission for 24-hour access, a bathroom with a shower, a cot or sofa, and a minimal work related kitchen. However, you are putting yourself and the landlord at risk.

Deposit: If the initial deposit is too high for you, try to obtain permission to pay the deposit over several months to reduce your initial expenses.

Rules and regulations: Some buildings have rules about elevator use, trash collection, and other details. Have such rules attached to the lease or get a written acknowledgement that no such rules exist.

Casualty provisions: Ask whether and to what extent you remain obligated to the lease in the event that you are unable to use the space because of a fire or failure of heating system for a significant period of time.

Heat and/or cooling on nights and weekends: Some commercial buildings provide HVAC during normal business hours only.

Parking: How many parking spaces are there for yourself and for visitors?

Building ventilation: Will your fumes or dust contaminate others' spaces or are there provisions for fume exhaust? At the most basic level, do the windows open?

Access: How do visitors find you and gain access to the building? Is there an entry system?

Next: Real Estate Development Tips

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