How to Pick a Space to Lease for a Restaurant

Opening a restaurant is exciting—and a lot more complicated than it looks from the outside. Before you finalize your menu, settle on a name, or start thinking about the opening-night playlist, there is one decision that shapes almost every other one you will make: where you set up, and in what kind of space.

A restaurant lease is a long-term financial commitment, often five to ten years, that will influence your operating costs, your capacity, the guest experience you are able to create, and your realistic path to profitability. Get it right, and the space becomes a genuine asset. Get it wrong, and it can quietly work against you from day one.

Define your concept before you search for a space to lease

The most useful thing you can do before touring a single property is to get specific about what your concept actually requires. Your vision determines your square footage needs, your kitchen specifications, your seating goals, your hours of operation, and the kind of neighborhood that will realistically support your business.

Start by answering these questions before you look at a single listing:

• How many seats do you need?
• Do you require a full commercial kitchen or a lighter prep setup?
• Will you have a bar?
• Is delivery a core part of your model?
• Do you need outdoor seating?
• What are your peak hours—breakfast, lunch, dinner, late night?

The ​​answers will shape every evaluation you make. A sports bar and a juice bar have almost nothing in common when it comes to space requirements—square footage, kitchen infrastructure, electrical capacity, neighborhood fit. Knowing exactly what you need before you start looking is what keeps you from compromising on things that actually matter.

Factor the location and foot traffic

"Location" is the most repeated piece of restaurant advice—and one of the most oversimplified. The right location is not the busiest street or the trendiest block. It is the location where your specific target customer already spends time.

Spend time there before you decide which space to lease

Visit any potential location at different times of day and on different days of the week. Ask yourself:

• Is foot traffic strong during your concept's peak hours?
• Does the block empty out in the evenings, or on weekends?
• Are the people walking by your target customer?
• Is the area growing, holding steady, or declining?

A coffee house depends on morning and midday foot traffic from people already in motion. A neighborhood ice cream shop lives on weekend afternoons and warm evenings. Make sure the rhythm of the neighborhood matches the rhythm of your business.

Visibility and access

• Can people see your entrance from the street?
• Is there clear signage potential?
• Is parking available nearby, or is the area walkable and transit-connected?
• Is the entrance easy to find for first-time visitors?

The neighborhood trajectory

An emerging neighborhood can be a real opportunity—lower rents, less competition, the chance to build a loyal early audience. But that comes with uncertainty. Before you commit, look at:

• Recent business openings and closures nearby
• Development activity and city investment in the area
• How long surrounding spaces have sat vacant
• Whether the landlord's asking rent reflects where the neighborhood is now or where they hope it will be

Talk to neighboring business owners before you make any decisions. They will tell you things that do not show up in any listing.

Size, layout, and physical condition of the space

Total square footage is a starting point, not the whole story. What matters just as much is how the space is configured, what condition it is in, and how closely the existing layout aligns with what you actually need.

Getting the size right building

Useful benchmarks to work from:

• 15–20 square feet per guest in the dining room
• 25–35% of total square footage dedicated to the kitchen
• A 1,500-square-foot space typically supports 50–60 seats with a modest kitchen—but only if the layout works

Do not let a number in a listing substitute for a clear-eyed look at how the space will actually function for your specific operation.

Layout efficiency

Walk through the space and think operationally:

• Is there a logical flow from entrance to seating to service?
• Can the kitchen communicate easily with the front of house?
• Are there structural columns, low ceilings, or dead corners that waste usable area?
• Where would your service stations, POS terminals, and storage go?

A tight but efficient layout will outperform a sprawling floor plan with awkward geometry every time.

The building’s current condition

Look beyond the cosmetic during your walkthrough of the space you may potentially lease:

• Check floors, walls, and ceilings for water damage, mold, or deferred maintenance
• Ask about the age and service history of the HVAC system
• Note any structural issues or accessibility challenges that would require remediation before opening
• Ask the landlord for documentation on recent repairs and any outstanding maintenance items

Spaces that have previously operated as restaurants are generally the most practical starting point—they may already have ventilation hoods, grease traps, and rough plumbing in place. Converting a former retail or office space is possible, but it requires a significantly more involved buildout. Make sure that reality is reflected in your budget before you fall for a space's potential.

Kitchen infrastructure and utilities

This is where the most expensive surprises live. The condition and capacity of a space's mechanical, electrical, and plumbing systems will directly determine your buildout costs—and whether your kitchen can actually support your concept.

Gas and electrical capacity

Find out the current gas line size and electrical service capacity before you go any further. If the space cannot handle your load, upgrades can add tens of thousands of dollars to your buildout before you have spent a dollar on finishes. A bakery running deck ovens, convection ovens, and proofers simultaneously puts serious demand on gas lines. A high-volume kitchen running fryers, flat tops, and broilers is equally demanding on both systems. Know what you need and confirm the space can deliver it.

Ventilation and exhaust

A Type 1 commercial hood and exhaust system is required for any cooking that produces grease-laden vapors. Installing or upgrading one is one of the more expensive line items in a restaurant buildout. If the space already has a functioning hood that meets code, that is a meaningful asset—verify it before you assume.

Plumbing and grease traps

Before committing, verify:

• Adequate sinks: dishwashing, handwashing stations at required locations, prep sinks
• Bar or specialty station drainage if your concept requires it
• A grease trap, required in most jurisdictions—installing one from scratch adds real cost and complexity
• Sufficient water pressure and quality, particularly important for any concept where the product depends on it

HVAC

A commercial HVAC system that can handle kitchen heat loads and keep the dining room comfortable is easy to overlook until it fails. Before you sign, understand the system's age, capacity, and service history. Replacing a commercial HVAC system mid-lease is expensive and disruptive—negotiate its condition into the lease upfront rather than inheriting a problem after you are already committed.

Zoning, permits, and compliance

Not every commercial space is approved for restaurant use, and not every restaurant space is approved for every type of food-service operation. Before you invest time or money into a location, confirm it is appropriately zoned and that you can realistically obtain every permit your concept requires.

Zoning

Confirm with your local planning or zoning department that the space is approved for food-service use. Pay attention to:

• Restrictions on alcohol sales or hours of operation
• Outdoor dining permissions if a patio or sidewalk component is part of your concept
• Whether a variance or special use permit is required, and how long that process takes

Health department requirements

Your local health department will inspect and approve the space before you can open. Understanding their requirements upfront—ventilation, handwashing station placement, food storage, surface materials—means you can design your buildout to pass the first time rather than retrofitting after the fact.

Liquor licensing

If alcohol is part of your concept, plan for the licensing process early. Key considerations:

• Licenses are often tied to the physical address
• Approval can take months in many jurisdictions
• In some markets, licenses are limited in number and must be purchased from an existing holder
• The timeline and cost need to be factored into your plan before you sign

ADA compliance

Confirm that the entrance, restrooms, and seating areas meet ADA requirements—or understand exactly what modifications are required to bring them into compliance. This is a legal requirement and a basic part of creating a space that works for every guest.

Lease terms and what to negotiate

Once you have found a space that makes physical and operational sense, the lease is where you protect your investment. The terms a landlord initially offers are almost never the final word.

Never sign a restaurant lease without having it reviewed by a real estate attorney who specializes in commercial leases—and ideally one with restaurant experience in your market.

Buildout and renovation costs

Very few restaurant spaces are ready to open without meaningful work. Whether you are refreshing an existing restaurant or converting a raw shell, your buildout will be one of your largest opening costs—and one of the hardest to estimate without professional help.

What drives costs

The biggest cost drivers in any restaurant buildout:

• Kitchen systems: ventilation, gas, plumbing—these are the expensive items
• Structural changes: moving walls, adding egress, reconfiguring layouts
• Code compliance: bringing older systems up to current standards

Cosmetic work—paint, lighting, furniture, signage—tends to be a smaller portion of the total, even though it is the most visible. Spaces with prior restaurant use are generally cheaper to build out. Existing hoods, grease traps, and rough plumbing can be reused rather than installed from scratch—but inspect everything carefully before assuming it is up to code or suited to your concept.

Rough cost ranges

Buildout costs vary significantly by market and scope:

• Light refresh of an existing restaurant: $50–$100 per sq ft
• Moderate renovation with some new systems: $100–$200 per sq ft
• Full buildout from a raw or non-restaurant space: $200–$400+ per sq ft in major markets

Always build a contingency of 10–20% into your buildout budget. Older commercial spaces routinely produce surprises behind walls—outdated wiring, subfloor issues, plumbing that does not meet current code.

Questions to ask before you sign the lease

Make sure you have clear, documented answers to all of the following before you commit.

About the space and systems

• What is the electrical service capacity (amps and volts)?
• What is the current gas line size?
• Is there an existing commercial hood and exhaust system? When was it last inspected?
• Is there a grease trap? When was it last cleaned and certified?
• What is the age and condition of the HVAC system?
• Are there any outstanding permits, violations, or liens on the property?

About the lease

• What is included in the base rent, and what costs—taxes, insurance, common area maintenance—are the tenant's responsibility?
• What is the annual rent escalation structure?
• Is a tenant improvement allowance available, and how is it structured?
• What are the terms for renewal options?
• Are there restrictions on signage, permitted uses, or hours of operation?
• Who is responsible for structural repairs or major system replacements?

About the landlord and building

• How long has the landlord owned the building?
• What is their track record with other food-service tenants?
• Are there other tenants whose future presence could create competition or operational conflict?
• How do they handle maintenance requests and emergencies?

Find the right commercial contractors with help from Block Renovation

Finding the right contractor for a restaurant buildout is a different challenge than sourcing one for a home renovation—the stakes are high, the systems are complex, and the margin for error is slim. Block Renovation connects you with thoroughly vetted, licensed contractors who understand the demands of commercial kitchen buildouts, from ventilation and gas to plumbing and code compliance.

Tell us about your project and get matched with experienced pros who can assess your space, give you an accurate picture of costs, and keep your buildout on schedule—so you can focus on opening the restaurant you set out to build.

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