Leasing Tips for Retailers

Leasing Tips for Retailers

For those retailers who are about to renegotiate their leases, the following leasing tips will I hope ensure that you secure a lease that sees you through the recession and will stand you in good stead for the next 5 years:

If your lease expires in 2009 ask for the first two years of the new lease term to be fixed at the agreed level with the first increase to be at the start of year 3.
Do not be afraid to ask for a substantial rental reduction at the start of the new lease. Landlords will be reluctant to lose tenants who pay their rent regularly.
To overcome any landlord objections, insert a market review at the end of year 3 of the lease which will allow the rental to be restored to market rent if the economy has recovered by that time.
Many retailers have a storage area within the store that is not used for display. Do not be afraid to split the store area so that you will have a 10m2 a store room and a 140m2 display area with rentals payable for display calculated at current rentals while the rent for the storage area is calculated at storage rates e.g. $200 per square metre with no outgoings for this area. This will reduce your overall rental cost for the 2 areas.
Instead of entering into a new lease, ask for the current lease to be varied for a further 2 years at the same or reduced rental thus avoiding the necessity of a refurbishment of the store and a saving in working capital which is difficult to obtain in the current climate.
Request that the landlord increase his contribution to the promotion fund to attract more traffic flow to the centre.
Use the opportunity to vary your permitted use to include other usages for the store, for example, a pharmacy incorporating a doctor or optometrist operating within the pharmacy.
Take the opportunity to again request for an option to be inserted in the lease that will assist with the resale of the store in the medium term.

This is an excerpt from the Retailer's Survival Kit by Hymie Zawatzky

HYMIE ZAWATZKY