Cider Corner: Keys to Negotiating an Affordable Lease Agreement

Courtesy Highpoint Cider

In 2014, Noble Cider looked everywhere for a suitable space to rent close enough to the populated areas of Asheville, North Carolina to establish its business.  

“We wanted enough room for production and a taproom but struggled even then to find a suitable location that would fulfill all our needs,” they explained to Brewer recently in an email. “We did eventually find a great location to rent and were in the process of signing when the landlord suddenly opted to go with a local brewery instead of us. We then started looking further out of town and additionally started looking at properties for sale.” 

So instead of having to negotiate a lease agreement the popular cidery instead found a location further out of town for sale.

“It was not in the ideal location,” they wrote, “but the mortgage ended up being less than our rent might have been and the value of the property has of course increased dramatically since then giving the company a sizable asset.”

The cidery did eventually open a downtown taproom in 2019 but just closed the location in January of this year with plans to find a new spot should it suit them financially.

Weighing the option of renting versus buying can be a tricky situation to maneuver but some cideries, like Noble, are opting to front that money and purchase property rather than working with a landlord. Many breweries and cideries have seen rent increases hurt their operation and having one less bill to pay that may have to be negotiated to a different price later on seems to be the key to having a more affordable option.

The Old Mine in Erie, Colorado occupies space in a building that is owned by the restaurant’s owner, John Jacquat, who also owns Sweets Ice Cream next door and the businesses share some seating. 

“This has truly simplified any leasing complications that would typically come up for a business like ours,” explained Hope Ruffner. The Old Mine does much of its cider production and canning out of a facility just minutes away from the restaurant called The Handlebar Factory. 

“We do rent the Handlebar Factory,” Ruffner said, adding it suits their needs nicely, but at times has raised concern due to rent raises. 

“We feel comfortable with our lease currently but are always brainstorming any and all creative options for our cider production,” Ruffner said.

READ MORE: Cider Corner: What to Watch for When Switching Locations

Landlords can be a minefield to manage and navigate, points out Highpoint Cider’s Andrew Perez. But, he added, with any partner/supplier or entity that your cidery does business with, make sure it is a good fit.

“Do your due diligence and your homework before signing anything,” he said, and if you have never had any sort of negotiation training he suggests to read on it.

“Life is a negotiation,” Perez said. “If you find negotiations uncomfortable, practice them until they are comfortable. I don’t believe that people rise to the occasion, people fall to their level of preparation.” 

Regardless of your negotiation acumen, he adds that if the person on the other side of the table is malicious, acting in bad faith, or greedy just walk away.

“You won’t be able to negotiate with someone who doesn’t care,” Perez said. 

He points out that your lease needs to be fair for both parties and that the relationship should be maintained over the course and duration of your lease.

“Keep communication open, and the relationship positive. Heck, maybe your landlord likes your cider,” the Idaho cidery’s COO said. 

And remember that regardless of how successful your business is, there is a market price for that location, and the value of that space is not determined by your business, but by the local market. 

“Tennant changes are risky for landlords — and making up lost revenue from a vacancy is near impossible to recover,” Perez said. “Every month that lot sits empty is money they will never get back. 

“Likewise, how long will it take you to leave the space? If you are dependable, maintain a positive working relationship, and pay your rent on time there are very few reasons a landlord would want you to leave aside from, you know, capitalism.”

Business success should never be tied to any sort of lease agreement, Perez added. 

“If that is on the table, walk away,” he said adding the counter, if you’re having harder times, does the lease amount decrease proportionally with your business? 

He did say that negotiating lease options can be a great way to extend your lease presence and that you should get pre-defined rate increases over time, which can defer the next time you have to enter that negotiation cycle. 

“Triple net leases are super common for commercial spaces,” he said. “See if you can get some dollars for leasehold improvements if you are adding value to the building.”

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