Useful Tips When Negotiating a Lease

The best type of rent package that can be negotiated is a gross rent deal ( ie. one that includes a total occupancy figure covering both Rent and Outgoings) and which is usually expressed as a percentage of Sales.

The next best rent package to be considered is one where you pay a negotiated net rent amount and where the outgoings for the current year are considered to be the " base amount ". In this case outgoings during the lease period would only be payable on your proportion of the amount, in excess of the base amount when the lease was entered into.

Most leases are based on an agreed cost per sq. metre plus outgoings, based on the area of the shop as a percentage of the gross lettable area.

Try to negotiate an initial rent free period of say 3 to 6 months to allow you time to get the store up and trading properly before rent is payable. You may however have to contribute to outgoings from day one. Given the current climate Landlords may well consider such a proposal.

Fit out contributions by the landlord have now become common place in many shopping centres and a 25 % contribution to the fit-out cost paid by the landlord is not uncommon. So never be afraid to ask for a fit out contribution from a landlord.

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

HYMIE ZAWATZKY

www.thetemplargroup.com.au