by Kyle Swain, The Leasing Department
1. Act early to get the best deal
Taking a proactive approach to key lease events such as lease renewals and market rent reviews allows you to take full advantage of your rights under the retail lease act relevant to your state or territory. By acting early, you can leverage clauses within the act such as ‘early determination of market rent’ and assess other opportunity costs to support negotiations and achieve the best terms possible.
By not starting the process 12 – 18 months before the due date, you potentially leave yourself with little or no power in the negotiation process which all too often results in the tenant being forced to accept whatever terms are on offer.
2. Understand what ‘market rent’ means
One of the most commonly asked questions I hear is “What rent should I be paying?”.
Understanding all the factors determining what the ‘market rent’ is for any given tenancy is crucial to your lease negotiations – whether your negotiating a new lease, renewing your current lease or undertaking a market rent review during a lease term or upon exercising an option term.
Crucial in this process is determining if the agreed ‘market rent’ is actually an amount your retail business can afford. Your leasing agent should look at use specific market rents and access retail metrics such as occupancy cost ratios and sales per square meter to determine what rent a tenant can afford to pay and remain financially viable over the full term of the lease, and use this as the basis for negotiations.
3. Level the playing field
Engaging a specialist tenant side leasing and tenancy consultant to represent you up to 18 months before your lease is due for renewal or when other issues arise during your tenancy can help to level the playing field in your dealings with landlords and agents.
Commonly, the landlord engages a specialist agent to act on their behalf to get the very best terms possible for them placing the lessee (retailer) at a distinct disadvantage. Engaging a specialist ‘tenant rep’ to act on your behalf can literally save you thousands of dollars over the life of your lease and ensure your tenant rights are protected under the retail lease act relevant to your business.
Kyle Swain is a retail property specialist with degrees in Property Economics and Business Administration. With a solid background in retail management with the former Coles Myer Group, and extensive experience across a range of property roles, Kyle has a unique skill set that positions him as a leader in tenant side leasing and property services. Kyle founded The Leasing Department specifically to assist retail tenants to improve bottom line performance.
All NRA members receive a complimentary consultation with The Leasing Department as part of your membership from January 2017.