retail leasing seems to be getting more complex with every passing year


National Retail Association CEO Dominique Lamb outlines how to get the best deal for your business when it comes to signing a retail lease.

The hodgepodge of different offers and imposts from modern lease agreements seems to be getting increasingly complex with every passing year, as landlords battle it out to nab new tenants—often to the detriment of existing tenants.

Some landlords have been known to offer highly-incentivised leases with stellar terms to entice new retailers, all the while counting on existing tenants coming up for renewal to accept unreasonable terms simply because their only alternative is to shut up shop altogether.

The National Retail Association’s leasing partner, The Leasing Department, has seen its fair share of unreasonable demands that have been made on tenants, some of whom would have found themselves in very precarious positions without specialist representation.

If you’re approaching a lease renewal or about to start a new agreement, it’s crucial to allow plenty of preparation time, to do your research, to seek sound financial and legal advice, and not proceed with any negotiation without representation by a tenant retail leasing specialist.

The Leasing Department’s Kyle Swain has outlined a few keys steps:

  • Know the processes and exact dates for renewals and reviews. Every state has specific guidelines around these processes.
  • Start 12-18 months before the lease event date. This gives you more bargaining power to negotiate an outcome that puts your business in the best position to be financially viable for the next lease term.
  • Understand how your business is performing against critical retail benchmarks e.g. occupancy cost ratio and sales per square metre.
  • Start with a clear understanding of what your business can afford to pay and the outcomes you need to achieve.
  • Engage a specialist tenant side retail leasing consultant to act on your behalf to achieve the best outcomes for your business.

There are so many tricky aspects to retail leases that can be negotiated up front to minimise risks and provide the best chance for your business to be successful.

Swain said no matter the size of your business, you should always get expert advice before entering into any new lease or committing to renew an existing lease as it will be an ongoing cost to your business that can be as much as 25 per cent of your sales revenue.

“The contracts, which are governed by the Retail Tenancies Act, can be very long and highly complex so they need professional assessment to ensure you don’t end up in serious strife down the track,” he said.

Dominique Lamb is the CEO of the National Retail Association.


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