That's correct. This term is not only poorly misunderstood in most accounts but can also represent a very difficult and almost impossible task for the tenant if they are not fully aware of everything that is involved.
So what does it mean to establish use? Well, let's look at it this way. Before any building is built, the use has to be determined in order to make sure there is adequate parking and water flow allocated for the specific uses.
Where you would normally come across this situation is in a Retail Strip center where there are multiple uses that can be had. The shopping center will typically permit for mostly retail with possible restaurant space. As the tenants come in to start their build-outs, draw up plans, and pull permits for their particular uses, each particular tenant's use will be established.
So, how does this affect a building owner or tenant once the building is built out. Simply put, if the space being rented has not had the use established through the proper permitting process, the tenant can find himself in a costly scenario with the landlord at odds to have the tenant open for business.
There are uses that are interchangeable and won't have this requirement. However, you will still be limited by your parking situation. These interchangeable uses are usually office and retail. Normally, you can go back and forth on these uses without worry. It's when you stray away from these uses and go into uses that fall into the non store and non office categories such as a barber shop, beauty salon, gym, and restaurant, that you will find this requirement most challenging.
So what is there to expect if a tenant does in fact have to establish use? If they're lucky, they can find plans already in the city from a previous build-out they can work with so it's not something that has to be done from scratch. They would then have to comply with all current building code requirements. This could include adding water fountains, a mop sink, lighting, and even changing the HVAC to some degree. Not to mention all of the other improvements they plan on adding to the space.
A tenant will then have to account for this down time which could easily take up to a year before they are done with all the permitting and construction. So, here we have 12 months of paying rent with a closed business, no revenue, and no foot traffic for the landlord. As a landlord, it's easy to say, well, it's not my problem, but I've seen many instances where building owners lease a unit, then 2 months later the tenant simply leaves because they can't get their doors open. And, if you're thinking that you'll simply sue them for the remainder of the lease, well, the real world may have something else in store.
There are many other issues to tackle and this is a very brief overview of the ins and outs of establishing use. However, it's an important issue to understand and plan for carefully whether you are an owner or tenant to avoid costly mistakes. I always recommend to visit your local building department to find out exactly what the situation is with the building.
If you know of anyone having a problem like this or are not sure of the issue yourself, please give us a call today for a free consultation.
www.allrealtymanagement.com
So what does it mean to establish use? Well, let's look at it this way. Before any building is built, the use has to be determined in order to make sure there is adequate parking and water flow allocated for the specific uses.
Where you would normally come across this situation is in a Retail Strip center where there are multiple uses that can be had. The shopping center will typically permit for mostly retail with possible restaurant space. As the tenants come in to start their build-outs, draw up plans, and pull permits for their particular uses, each particular tenant's use will be established.
So, how does this affect a building owner or tenant once the building is built out. Simply put, if the space being rented has not had the use established through the proper permitting process, the tenant can find himself in a costly scenario with the landlord at odds to have the tenant open for business.
There are uses that are interchangeable and won't have this requirement. However, you will still be limited by your parking situation. These interchangeable uses are usually office and retail. Normally, you can go back and forth on these uses without worry. It's when you stray away from these uses and go into uses that fall into the non store and non office categories such as a barber shop, beauty salon, gym, and restaurant, that you will find this requirement most challenging.
So what is there to expect if a tenant does in fact have to establish use? If they're lucky, they can find plans already in the city from a previous build-out they can work with so it's not something that has to be done from scratch. They would then have to comply with all current building code requirements. This could include adding water fountains, a mop sink, lighting, and even changing the HVAC to some degree. Not to mention all of the other improvements they plan on adding to the space.
A tenant will then have to account for this down time which could easily take up to a year before they are done with all the permitting and construction. So, here we have 12 months of paying rent with a closed business, no revenue, and no foot traffic for the landlord. As a landlord, it's easy to say, well, it's not my problem, but I've seen many instances where building owners lease a unit, then 2 months later the tenant simply leaves because they can't get their doors open. And, if you're thinking that you'll simply sue them for the remainder of the lease, well, the real world may have something else in store.
There are many other issues to tackle and this is a very brief overview of the ins and outs of establishing use. However, it's an important issue to understand and plan for carefully whether you are an owner or tenant to avoid costly mistakes. I always recommend to visit your local building department to find out exactly what the situation is with the building.
If you know of anyone having a problem like this or are not sure of the issue yourself, please give us a call today for a free consultation.
www.allrealtymanagement.com
written by: Victor A Abreu