Dealing with Commercial Relationships Revenues, Rentals and Relationships

In the typical suburban condo development, one must go to another location to shop— maybe to the mini-mall, or the big box store down the road. But in many of New Jersey’s urban high-rises, retail businesses and stores are often found on the ground floor—supermarkets, restaurants, drugstores, clothing stores and more. Sometimes you’ll even find doctor’s or dentist’s offices.

The relationship between the co-op or condo and the ground-floor business tenant is a complicated one. Having these stores on the ground floor is often seen as a plus by shareholders or unit owners. But for management, it can raise questions. There can be a lot to unpack from the standpoint of insurance, liability, and other concerns.

Desirable and Undesirable

What kind of business is the 'ideal' commercial tenant? Answers vary.

“A commercial tenant who could provide a useful service to the building would be ideal to the residents,” says Chris Cervelli, a portfolio manager with Cervelli Management in North Bergen. “Either a small grocery store, dry cleaning, dog sitting, those are some examples” that come to mind, he says.

“An ideal tenant is someone who will survive in the condominium environment,” says Dolores R. Kelley, an associate attorney with the Lawrenceville office of Stark & Stark. “Depending on the area and neighborhood, if you are in the middle of Hoboken, for example, then tenants who provide personal services such as spas, salons and dry cleaners would be successful. That would benefit everyone because you don't want an empty commercial unit. You want a tenant that will survive and fit well within the community,” says Kelley, who is with Stark & Stark’s Real Estate, Zoning and Land Use practice.

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