An attorney discusses gearing up to renovate a retail store: An answer to the common questions - by C. Jaye Berger

C. Jaye Berger, Law Offices of C. Jaye Berger

The retail market in New York City is hot and retailers are coming from all over the world to set up shop. Many have never done work in New York City and have no idea where to begin.  A common question they ask me before we look at leases is  “What should we do first?” and “What are the most common problems people run into?”

First, they need to have a team in place. They need a designer or architect to advise them right away on whether spaces they are looking at will work for them, both physically and financially. I went with a client to look at a space that was in such need of renovation work that your foot could go through the floor into the basement. You have to understand how easy or hard it will be to fix such a space and how expensive. A good, experienced  architect will be able to tell you that quickly.  It may not be as hard as you think or it may be far more complicated than you realize. The same space had steps inside the front door leading up to the space that needed repair and the landlord wanted the tenant to install a railing. The tenant has to decide how much they are willing to take on for a space they like and negotiate with the landlord about who will do what.

Out-of-towners, especially from other countries, should be aware that they need to have an architect on the team. Designers and architects work differently in other countries and they definitely will need a local New York architect, even if they have an architect or designer from their home base helping them. The company may have design ideas they bring with them, but they need to be implemented to conform and comply with local laws.

Another big issue is deciding who will oversee the project. The executives from the company will have some involvement, but they really need professionals to do that for them on a daily basis. Often it is the architectural firm that will mainly do this, but they may also need an owner’s representative to be another member of the team.

A good broker is an essential member of the team. Often their advice goes into other areas beyond just the location being rented, such as giving direction for locating design professionals and even finding legal counsel.

The biggest issue can be concerning an overlap in the work that needs to be done. The landlord may have work he needs to do before you can do your work. This needs to be carefully worked out since his work may slow you down and before you know it, you are using up your “free rent period.”

You want to know that the space is fully vacant so you have possession, subject to whatever work you need to have done. “Holdover tenants” can be a nightmare. If the prior tenant does not leave, for whatever reason, it can take a very long time for the court system to evict them, so that you can have possession and get started on your renovations.

You will need to have your team guide you and give you advice on the timing of the project. Designing the project may take a while. The landlord will need to review and comment on your plans. The bigger the project, the more comments. I have been involved as legal counsel with projects where there were three rounds of comments on the plans spanning several months. Once the plans have been approved by the landlord’s architect, you can file for permits.

There are always going to be surprises in the course of any project, so plan for them. There will be hidden things in the walls that require re-design. Time must be allocated to deal with those things, as well as dollars. Many people go into projects without adequate funding and extra funds for unexpected expenses. Many out-of-towners are not prepared for the large security deposits they will have to pay on top of the rent and the renovation expenses.

Usually stores need custom millwork for displays and decorating. Time must be factored in for how long that will take to fabricate and deliver. For example, cabinets may be ordered from another country and can take 12 weeks or longer.

A good attorney who knows real estate and construction law is essential. I have helped many a client understand the laws on mechanic’s liens and breach of contract. If a renovation is not run properly, they can end up having many mechanic’s liens. A little good counsel before work begins can go a long way towards having a smooth project.

C. Jaye Berger, Esq., is the principal of the Law Offices of C. Jaye Berger, New York, N.Y.