Top Ten Shop Leasing Tips for Retailers
The Lease is the goodwill of a retail business!
What if the Landlord doesn’t renew my lease?
Good question. A shop lease is like any other lease. It is for fixed period of time. There is no obligation on a Landlord to renew your lease when it expires.
That is where the value lies. It is directly proportional to the tenure remaining. i.e. no term left means the business has no value. And there is no obligation on a landlord to renew your lease at all.
Plan!
There are six-months left before my lease expires.
This is not long enough to properly explore and assess all the possible options open to you.
Anticipate the expiry of the lease and take the initiative in approaching the owner of the premises about renewals.
Relationships – Learn to love the Landlord!
I don’t like my Landlord.
It doesn’t matter. Regardless of what you may think of them personally they are so important to the value of your asset (the Lease) you must work at building a relationship with your landlord or their managing agents. Always be professional, respectful and courteous.
Personal Contact!
I sent them a letter.
Not good enough. Although records and written communications are important make your relationships personal. Don’t just call, or email. If they don't come to you make your business to go and see them.
Ask Questions!
I don’t know what businesses like mine pay in rent.
Just ask. Ask questions of everybody; other tenants, the Landlord, Industry bodies. About rent levels, recent sales performance, and future development plans for the property for example. This is why we build the relationships.
Keep records!
But the Landlord said…
Unless you have a written record of the conversation then it didn’t happen.
Keep records! Make a record (notes) of all pertinent conversations you have with the Landlord or their representatives when discussing the lease. Confirm anything you rely on in making decisions about rent or location in writing. Create a paper trail.
Read your Lease and any other documents!
I have a lease.
Unless you have read it this statement is meaningless. Read your Lease and any other documents!
This seems obvious but most people rarely read the whole document. It can be intimidating but it will only take a few hours once every five years and could save you a lot of money in the long term. Even if you do not understand every word it will prompt you to ask the right questions.
Understand your market!
By market we do not mean the market for your products but rather the market in which you compete for premises, be it a shopping centre, high street or country town. Be alert to opportunities to relocate to a better location or new developments opening nearby before you renew a lease in your current location.
Understand your business and Rent!
Know exactly how the occupancy cost (rent and outgoings charges) are calculated and what proportion of the business’ turnover they are. That way you can discuss the issues such as rent with confidence. It is surprising how many of our clients cannot tell us exactly what they are paying the landlord in rent and outgoings when they first consult with us.
Get advice!
…from everybody but including your accountant, lawyer and retail leasing specialists such as Retail Pace.
Ten tips for free
Copyright Retail Pace Pty Ltd 2009