What Apartment Owners Should Know Before Leasing to a Restaurant

Before the pandemic, restaurants were among the most sought-after retail tenants, and even in a post-pandemic world, restaurants continue to perform well despite new challenges. It isn’t surprising that apartment owners with ground-floor retail spaces would want to ink a restaurant tenant, but Gary Glick, a partner with Cox, Castle & Nicholson, says that apartment owners should make sure they are complying with space requirements first.

“It is critical to multi-family developers that their leases with food users with on-site cooking facilities require regular and adequate cleaning of all exhaust systems,” Glick tells GlobeSt.com. “This cleaning should include degreasing of all hoods, fans, vents, pipes, flues and grease traps. In the event any food user fails to clean such systems, the landlord, upon written notice to such tenant, should have the right to arrange for the cleaning of such system, and the tenant should be required to reimburse the landlord for all of these costs.”

Venting is also crucial, and while the burden falls on the tenant to comply, the landlord should ensure requirements are met in the lease structure. “Restaurants should be required to install proper venting and pollution control filtration systems, which may also be required by governmental requirements,” says Glick. “Multifamily developers do not want any of their residential tenants to experience strong odors from restaurants in the project.”

While health and safety are the major concerns when signing a restaurant lease, Glick says that there are some details that should be outlined in the lease—and they can often be overlooked. “The retail lease should also prohibit a restaurant from washing its floor mats outside of its premises,” he says. “The restaurant should be designed with a dedicated area within the premises for such cleaning.”

Of course, the potential for infestation increases with a food-related users. That is the last thing that an apartment owner wants on the property. Glick recommends leases address this potential concern. “It is critical that leases with food users require them to keep their premises free from insects, rodents, vermin and other pests,” he says. “The lease should require these food users, at their expense, to engage reputable professional exterminators to provide pest extermination to their premises on a monthly basis, or at such greater frequency as landlord may reasonably require, and as otherwise may be necessary to keep the premises free of pest infestation so as to avoid infesting the common areas or any of the residential units.”