Top 3 tips for saving money on your lease
by Kyle Swain, The Leasing Department for the National Retail Association
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 leverage other opportunity cost scenarios, achieve greater power at the negotiating table, and achieve the best commercial and operational terms possible.
Action step: Check your lease and make a note in your diary on the date 18 months before the due date of your next lease renewal, option term or market rent review. This is the date you need to contact The Leasing Department to start work on your behalf.
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 you're 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 consultant should use comparable market rents, but also use 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.
Action step: Contact The Leasing Department on 1300 366 187 and ask us to conduct a performance review of your lease to compare your store performance to industry benchmarks and determine how much rent you can afford to pay, and develop a strategy to improve your financial viability/performance or re-align lease terms to performance/market conditions.
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.
The landlord routinely 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 rights as a tenant are protected under the relevant retail lease legislation in your State.
Action step: Call The Leasing Department on 1300 366 187 and speak to us about acting on your behalf in all dealings with your landlord to make sure you get the very best commercial and operational terms possible.
The Leasing Department is the leasing and tenancy consultant to the National Retail Association (NRA). We play a key role in guiding NRA members on leasing and tenancy issues affecting their business as well as provide input on leasing and tenancy trends and developments across the retail industry.
Founder and Managing Director of The Leasing Department Kyle Swain is a regular contributor to the NRA's blog and newsletter providing regular tips and information on how to maximise your lease performance and get the most from the property function in your retail business.