things to know before you sign the lease for your yoga studio

By: Lynn Burgess, MBA, RYT

the language of the lease

Aspiring yoga studio owners have a variety of challenges to face in the process of realizing the dream of a studio of one’s own. Along with learning to understand the art of running a yoga business, these entrepreneurial yogis must also make sense out of real estate, its essence, its officiators and its jargon. To that end, a few simple tips could mean the difference between breaking the bank or going for broke.

The biggest question any studio owner faces is location, location, location. In the process of finding the ideal location, a studio owner must first decide if they want to occupy a retail space or a professional center. While retail spaces will always be more expensive, they are also very visible, and will generally have a higher concentration of foot traffic due to surrounding businesses. In this case, the extra rent going out could well be worth the extra revenue coming in from folks who just happen to notice the studio and decide to drop in on a lark. Retail spaces also usually allow signage, which will essentially give an owner “free advertising” to whomever is passing by.

Professional centers, on the other hand, are less expensive, but they also have limited signage and are often located in areas that do not cater to as much to foot traffic as a retail space does. Professional centers also often provide smaller interior rooms, so unless a studio owner is allowed to move a few walls, they might find their revenue limited by the number of students they can actually allow into the practice room.

Once a location has been decided upon, the studio owner will now have to deal with the often confusing process of working out a lease. In dealing with real estate agents and landlords, it can sometimes be confounding just deciphering what sort of a deal is even being offered. Before diving headlong into negotiations, a studio owner should first familiarize themselves with a few terms of “real estate-ese”. 

Ӣ Lessor vs. Lessee: The lessor is the landlord, the owner of the property. The lessee is the studio owner, the person trying to rent said property.

Ӣ Price per square foot: This refers to the amount the landlord is asking in money for the amount of space the studio owner is asking to rent. If the yogi is paying $1,000 a month for a studio that is 1,000 square feet, then the price per square foot is $1.

”¢  Triple net: This term is used in leasing to refer to the cost of services and overhead that are involved in managing an entire building. It will appear in addition to the monthly rent and is based on the square footage being rented. The triple net can include anything from taxes to garbage disposal to care of common areas shared by all the tenants. Triple net may also have a maximum (cap) that is added to the lease’s square foot price.

”¢  CPI clause: This clause links the rent to any increase in the cost of living in the neighborhood the studio is located in. If the lease does have a CPI (Consumer Price Index) clause, the studio owner should make sure that it does not exceed 3%.

”¢  Leasehold improvements: These include any improvements the lessee might need to make to the interior of the rented space. This would include such things as moving walls, installing mirrors, paint, electrical outlets, flooring, etc. Often, the landlord will make concessions for their lessee if such improvements are undertaken, such as lowering the rent, but this is not a given.

Once the aspiring studio owner has gone over the basics, finding the perfect location and learning the language of the real estate they are interested in, it is time to commit. Before fully doing so though, the yogi should take a few moments to review, ensuring that they will really get the most out of their new investment. Whether it be retail or professional space that the studio owner decides upon, they would be well-advised to make sure that it is a highly visible space. If no one can find the studio, no one will come in and buy classes.

Once the space is settled and the studio owner is ready to go into negotiations, they would do well to find a leasing agent who has their best interest in mind. Often, agents will represent both the lessor and the lessee, which can mean that someone might be left holding the short end of the deal. Finally, there is no need for the aspiring studio owner to be naïve, just because they are a novice. It would behoove the yogi to take a class, or enlist the help of professionals so that they can learn more about real estate and leasing. Being armed with a little extra knowledge has never served anyone ill.

In this way, new studio owners can find their way around another hurdle to starting up with ease and peace of mind. The small investment of learning a little about real estate and leasing may end up paying back great rewards further down the road.