High Powered Retail Shop Leasing Tips
The commercial and retail property market has changed a lot over the last couple of years. The retail property segment has particularly been under pressure from escalations in small business operating costs and reductions in retail sales.
The internet has impacted the way many people buy retail goods, and that impacts the way retailers can trade and sell.
Somewhere in amongst all this is the shopping centre owner that is offering a quality property to the tenant mix and the local retail customers. So how does all this balance out?
The reality of today’s retail property market is that it will not disappear, it is just changing. Retailers will still require premises into the future, albeit some retailers will change or may operate their businesses differently. Customers still like to ‘shop’ and ‘feel good’; shopping centres serve that need.
Stakeholders and Situations
A successful retail property or shopping centre is a mixture of stakeholders that all work together to achieve a balance of vested interests. The stakeholders are:
- The landlord
- Specialty tenants
- Anchor tenants
- Community groups
- Customers
- Financiers
- Municipal councils
- Local businesses
- Property Managers
- Leasing Managers
The last group on the list is perhaps best placed to make the ‘retail property equation’ work productively for all.
The leasing manager can stay in contact with the market and all the changes that are occurring. The leasing manager can balance all the facts of this property market to achieve a viable tenant occupancy and long-term lease.
Different Rents and Situations
I would like to remind landlords today that it is not the starting rent of a lease that is important in a lease negotiation; it is where you will head with your market rental value over the lease term. That is where the leasing executive can add real value in structuring a shop or premises lease that works for all parties and with something that helps reduce the vacancy factor in the property.
So what are the priorities in leasing vacant shops? Firstly, finding the right tenant for the location, and secondly, leasing the shop on a long-term lease that suits the landlord’s investment plans. The market rent is actually the third priority on the list.
The starting rent can be boosted over time through some rent review process, so the actual lease rent at day one of the lease is more reflective of market trends and not ‘an aggressively high’ rental. Fill the premises with the right tenant, that is the priority.
Rent reviews, lease options, renovation obligations, permitted use, and relocation provisions all offer some strategy factors. We also know (or should know) how to market and position a retail property to optimise the lease enquiry.
Right Strategies and Ideas
As the retail property market changes, we, as specialist real estate agents, are very well placed to offer the right strategy and ideas to make a lease deal work. That is a high-value offering to the landlords in our property markets. We sometimes forget that we really are property specialists and know much more about putting a lease deal together than the clients that we serve.
If you are struggling with your market share or marketing efforts, consider the value you provide your clients and property owners. Lift your expertise and relevance to a new level so you really are better than the other agents in the local area (in most cases, that is not too hard to achieve!).
Change is Opportunity
When any commercial or retail property market undergoes change, it is time for us as agents to lift our value and focus on helping the clients who need us. Market yourself as the property expert; help people solve property problems. Opportunity awaits the specialist property agent.
