Leasing a restaurant or hotel – what should be considered

Leasing a restaurant or hotel is a significant decision – for both owner and tenant. A poorly structured lease can create years of conflict; a well-prepared one builds the foundation for a stable, long-term relationship. This guide outlines the key steps.

1. Prepare the property professionally

Before approaching the market, ensure the property documentation is complete: current floor plans, inventory list, energy certificate, recent maintenance records and – ideally – the last three years of operating figures. Gaps here create doubt and delay negotiations.

2. Determine the right lease rate

A sustainable lease rate is typically around 10–13 % of realistic annual revenue. The often-cited rule of thumb "rent × eight" (annual revenue ÷ 8 = maximum sustainable rent) provides a useful starting point. Over-pricing a lease rate is the single most common reason a property sits vacant for extended periods.

3. Market discreetly

Broad public advertising creates operational disruption – staff become unsettled, guests notice. We recommend a targeted approach: direct outreach to qualified prospective tenants from a curated network, with full confidentiality until a signed NDA is in place.

4. Screen prospective tenants rigorously

A lease is a long-term commitment. Key questions: Does the prospect have relevant operational experience? Can they demonstrate sufficient capital? Are their concept plans realistic given the location and catchment area? A preliminary self-disclosure form and structured interviews are the standard approach before any viewing takes place.

5. Structure the lease agreement correctly

Critical clauses include: permitted use, lease duration and renewal options, indexation (consumer price index linkage), deposit, FF&E handover, subletting restrictions and end-of-lease reinstatement obligations. We strongly recommend engaging a lawyer experienced in commercial hospitality leases.

Would you like support with leasing your restaurant or hotel property? Contact our team for a confidential initial conversation.