Renting, Landlords & You: 5 Tips to Help Your Retail Business
Whether renting a space among big box stores or nestled in a quaint town filled with indies, it helps to understand how landlords think. From the length of your lease to the extra perks – or lack of them – in the fine print, be sure you secure a lease that’s right for you and your business.
1.Negotiate the Duration You Want
In the good old days, landlords may have been able to call the shots on how long they wanted a tenant to occupy a space. Depending on your local market, this isn’t always the case today. Be persistent – yet professional – in securing a timeframe on a rented space that makes sense for you. A ten-year deal may not be in your best interest if you are a first time and first year retailer. Then again, if you are a veteran running a family business, ten years may be your ticket to a lower rental rate. Do what’s right for you – not what is right for them.
2. Secure Extra Perks
From parking spots to janitorial expenses to maintenance and repairs to snow clearing services, these “extras” can add up fast – both in perks and dollars. Negotiate up front with your potential landlord what your rent covers and exactly what it does not cover. Don’t forget to identify a cap on an increase in your rent once your existing lease in consideration will be up for renewal. 2% to 3% is a fair increase in many markets. 8%, however, is typically way too high. These extra details in your contract are perks themselves, giving you trust in a fair renegotiation when the time comes.
3. Investigate Your Landlord
Sure, he may seem like a nice guy during your space walk-through, but that isn’t the same guy you may be working with as a tenant. Find out who your day to day communication will be with, as well as ask for references of current and past tenants from your landlord. Then follow up on them! Ask questions about how timely the landlord was in responding to unexpected inquiries, dilemmas and other renter challenges, as well as how he was to work with in general. Your goal should be to identify any red flags as well as better understand what it may be like to work with your landlord. After all, he may not be the boss of your store, but he is the boss of your store space.
4. Use Your Resources
Your local business community might include a Small Business Development Center, a Business Improvement District, an Economic Development Partnership or a Chamber of Commerce that will help you negotiate your lease and the “perks” you want to include. Often they will work on behalf of a number of tenants to make sure businesses are being treated similarly and fairly even when they have separate landlords in order to bring a level of coherence to the local business landscape. Often, they can also assist or even support you entirely in communicating with local government and your landlord to make sure that your store space is up to code and within regulations. This is especially important if you need a special use permit, significant construction on your store space, or help with a zoning variance.
5. Identify Sublet Options
When opening a store, few people already are thinking ahead to when it may close. But the reality is, life happens. Whether “life” truly gets in the way (spouse job change, childcare issues, personal health, change of heart, etc.) or your store needs to shut its doors for financial reasons, you should know before you sign your lease what your options may be if you need to break your contract. Among these? Subletting. Depending on your landlord or property management company, subletting may or may not be an option. Knowing this upfront can save you a very big headache in the future. Be sure to understand any costs involved from your end, as well, if you should need to sublet or break your lease. While this likely isn’t your goal, it may be a scenario you have to face one day. Being prepared will only help you.
A final thought? When considering your store location, consider who walks by it or drives by. For that matter, consider if no one does. Location – as they say – DOES matter (like it or not).