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Retail Leasing Tips for Commercial and Retail Leasing Agents

man in fruit shop
Choose your tenants well to help your retail property thrive and grow sales.

In retail leasing, you really do need to know your territory and tenants.  The retail business segment is under some pressure at the moment in many respects.  The internet has changed the way shoppers buy goods, and the spending patterns of people have changed due to the global economy.

When times are tougher in retail shopping and trading, it is the ‘convenience’ type tenants that still do quite well.  Convenience tenants are usually food and consumable related (baker, fruit and veg, butcher, chicken, and fast food).

To help your shopping centre trade and thrive in tougher retail times, you need to closely look at your tenant mix and the clustering of tenants.  Everything has to be done to encourage more trade for tenants and between tenants.  Tenants should be selected on the basis of relevance to your local shopper and their needs.

As a retail leasing expert you can get close to the retailers and the business community.  This will help you find the right tenants and the successful traders.

Here are some ideas to help you build a matrix of retail leads and opportunities in retail shop leasing.

  1. Franchise groups are a proven business model.  Some of them will suit your property and shopping centre.  Talk to the franchise groups to understand what it is that they need in a property to consider occupation and leasing.  Find out what their business model is and the standard lease terms and conditions that they require.  Some franchise groups may also not be located in your area and may be looking to enter the region.  Make some telephone calls and ask the questions of the right people.
  2. Business owners in the local area know so much about the local businesses and the community.  Approach the business owners and the wholesalers or manufacturers of retail goods and services.  Through that contact they may give you some leads for talking to successful retailers.
  3. Existing properties in your local region will contain successful tenants and businesses.  Check out those properties and talk directly to the tenants.  Some of those tenants will be quite successful even in a slower retail cycle.
  4. Shopping Centres and Shopping Centre Managers will offer lots of retail leasing leads and needs.  Shopping Centre Managers will have leasing needs in their properties from time to time.  Their tenant mix will change and the property may expand or undergo redevelopment.  Either way, retail leasing activities will follow in some form or another.  Most shopping centres have a business plan and a tenant retention plan, in addition to standard lease strategies and lease marketing efforts.  Get to know your shopping centre managers for the leasing needs that will arise.

Landlord owners of retail properties and retail shopping centres need experts in leasing to help them.  This is where specialisation in retail leasing is so important.  You can fill that requirement with some specialised industry knowledge and leads.

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Commercial Realtors – Leasing Opportunities with Franchise Tenants

blur of people walking through shopping centre mall
Franchise tenants can work well in your tenant mix in a retail shopping centre.

In commercial and retail real estate today, there is a significant shift in leasing to franchise tenants in the tenant mix.  The reason being, that franchise groups bring a brand name and a business model to any vacant area in a property.

Not all franchise tenants are the right choice for a commercial or retail property.  Due regard should be given to the existing mix of tenants and just how the franchise tenant will integrate into the overall property.  Some of these franchise tenants can create extra demand on the property such as:

  • Security
  • Access to the premises
  • Rubbish and waste disposal
  • Car parking
  • Customer access
  • Hours of operation
  • Marketing and display of signage, etc.

So a lease for a franchise tenant should be carefully considered and negotiated.  That being said, many franchise tenants will have their own lease to submit to the landlord of a property.  Whilst that is convenient, the landlord should carefully consider the differences between the franchise tenant lease and the standard lease for the property.  In most cases the lease provided by a franchise tenant focuses on just one thing; the running of the franchise business.

Here are some tips for negotiating leases with franchise tenants today:

  1. Meet the tenant on site and walk through the factors of occupancy that are critical to the operation of their franchise business.
  2. Understand that the franchise business will have a business agreement that will need to integrate with the duration of the lease of the property.  Some landlord flexibility may be required to make that match.
  3. Ask questions about special occupancy needs such as grease traps, air conditioning, cleaning, refuse, and customer involvement.  If there is a cost to be considered, ask about who pays.
  4. The make good provisions at the end of the lease will always be important.  The landlord requires clean and reinstated premises.
  5. Understand just how the tenant will be integrating their marketing into the property and what signage they will require for the process.  They will need to position signage where consistent branding messages are conveyed to the customers and passing traffic.
  6. If the tenant operates outside of standard property hours of operation, it will be necessary to consider the costs that occur as part of that process.  The costs should be directed to the tenant to pay as part of the lease structure.
  7. As to who will be the lessee in the property will be a valid and important question.  Normally the franchise group does not want to lease a tenancy space unless it is of prime importance to their business model and operation. That is why they only directly lease the prime locations.

A franchise type tenant is a good tenant; they just need extra attention to ensure that the lease in the property works for both parties.

Asking questions in the lease negotiation will always help with the future occupancy for both parties.  Look for any issues of challenge and deal with them upfront.