Retail Leasing expert Don Gilbert brings to the table a wealth of knowledge about the Dos and Don’ts of Retail Leasing and how a few simple steps could lead to incredible savings and avoid unnecessary heartache.
To Lease or Not to Lease
As a butcher is seen as a great asset to their community, a retail lease needs to be seen as an asset to your business, as well as that to the shopping centre in which the business trades. However, this is not always the case and once you have signed the lease it’s too late to turn back, and the consequences could be financially crippling.
To avoid your lease squeezing your profits to oblivion, here a few simple Dos and Don’ts to put you in the right direction. It begins by planning ahead:
Consider the following:
- Do you want a lease?
- Is the business profitable, ie are you able to gradually write off the initial setup costs of the lease, around 20% pa, over the term of the lease with enough left over to pay for wages?
- How much rent do you want to pay?
- What steps are you doing to match the lease to the rent you are paying?
- Do you have Company Structures? Did you sign a personal Director’s Guarantee and why?
- Always keep your relationship with the managing agent/ landlord professional.
Avoid these pitfalls:
- Not planning for a lease renewal option.
- Believe that the rent must always go up / be higher.
- Believe that rents can’t fall and/or decline significantly.
- Commit to new lease terms before getting independent expert advice.
- Evaluate what your rent ought to be on a dollar per square metre basis ($/m2); always evaluate the rent on a percentage of turnover (occupancy cost to sales).
- To Make the landlord an offer. Always solicit an ‘Offer to Lease’ from the landlord to you/your company.
- Sign long poorly structured lease.
- Not having a strategy in mind to avoid these pitfalls.
- Not getting advice early when things could go awry.
For more than 35 years Don Gilbert, from Australian Lease & Property Consultants, has been our country’s greatest advocate to ensuring that retail property valuations are fair and equitable. He is a sought-after international speaker, and provides independent, impartial advice to help clients resolve problems with their retail lease agreements and settle retail disputes.
© Copyright 2019, Donald Evan Gilbert, Australian Lease & Property Consultants Pty Ltd