“The Commercial Real Estate Hour” on KHTS with Jesus Henao of Leola Commercial Inc. recently focused on what someone opening their own business can expect during the leasing process.

Henao invited Lee Anne Sichel, an associate broker at Told Partners Inc., to talk about the steps he would need to take if he hypothetically wanted to open a pizza restaurant in Newhall with $1 million in his pocket.

Sichel first pointed out that opening a restaurant is a very different process than opening an office like a law firm or CPA.

Related: ‘The Commercial Real Estate Hour’ On KHTS: Construction And Fees

“You have to be concerned with a few items before you get into the restaurant business,” Sichel said. “First thing I would suggest that you do is write a business plan.”

In that plan, Sichel advises outlining the estimated cost of utilities, where money will be allocated (i.e., how much is planned for tenant improvements, how much is for rent, how much can be saved for future expenses, etc.), and the specifics about the funding available.

“Let’s say, yes, you do have $1 million,” she said. “Is it all liquid or is it in mutual funds or whatever that have to be cashed out? … Are you going to have a loan going in? Some people want an SBA (Small Business Administration) loan, and SBA loans can take a little bit of time.”

The next step is to present this business plan to the prospective landlord, along with what Sichel called a “resume” of experience in the industry.

“When you open a restaurant, it’s a very expensive venture, so you definitely want to be prepared,” she said. “Add a resume of where you have been and what qualifies you to open a restaurant, assuming that this is not a restaurant that is a regional or national chain — that’s a different situation.”

Assuming the landlord approves of the specifics, Sichel noted the next step is to visit the city’s planning division.

“You give the city your address, because they’re the ones that have to give you the certificate of occupancy,” she said. “They’re going to say to you first thing, ‘What is it you’re going to do to this space and do you have permits to do it?’ So you have to make sure you have a general contractor who really knows something about restaurant space.”

What Sichel described as the “most important, first thing” to address with city planning officials is that there is adequate parking for the restaurant.

“I ask, ‘Do I have enough parking?’ and they give me a parking plan, and their parking plan can change,” she said. “You always want to be make sure you have enough parking… Parking is really the key to restaurants.”

The last major step in the leasing process before the paperwork is signed and construction can begin is to work out the specifics with the landlord, including rent, triple net (common area) charges, planned reserves, etc.

“You want to make sure that you are prepared to pay those additional expenses — that is not included in your rent,” Sichel said, referring to triple net charges and reserves, which she advised keeping separated from rent payments.

Henao added, “That’s good to have those separate accounts, because when you’re doing your accounting, those are write offs on your business expenses. You want to have those itemized.”

Leola Commercial, Inc.

26575 Ruether Ave 2nd Floor

Santa Clarita, CA 91350

(818) 570-3301

Leola Commercial, Inc. is a boutique Santa Clarita commercial real estate firm that specializes in the sale of multi-family apartments, land for development, retail real estate, senior housing, tax credit properties, industrial, NNN and office. Headed by Jesus Henao, the Santa Clarita real estate firm prides itself on maintaining “old world” customer service principles and personalized representation. Henao is also the host of “The Commercial Real Estate Hour” on KHTS Mondays at noon.

Leola Commercial, Inc. – Santa Clarita

https://www.youtube.com/watch?v=fYXK5H4JxpQ

Leola Commercial Inc., Commercial Real Estate, Multi-Family Apartments, Santa Clarita Commercial Real Estate, Land for Development, NNN, Retail Real Estate, Santa Clarita Real Estate