Retail Tenancy Database
JAA Retail Tenancy Database coming soon. Stay tuned!
Top 8 tips for negotiating a better lease
1. Exercise your options correctly and in time
Options are time sensitive and lapse if not exercised within the time period specified in your lease. Usually 3-6 months before expiry, however always check your lease.
2. Don't just focus on base rent
Other items can make up to 25% of total occupancy costs. Focus on rental increases, bank guarantees, operating expenses, promotional levies, permissible use, personal guarantees/covenants and incentives.
3. Understand your make good obligations
You are required to make good at lease expiry, to the original condition of the premises (allowing for fair wear and tear). Always do a dilapidation report prior to taking over the premises to avoid leasing disputes.
4. Know your market rent review rights
There is usually a provision that allows the lessee to make a submission to the determining valuer. However, such submissions must be in writing and should be based on fact rather than hearsay.
5. Mitigating leasing risk for new developments
Tenants should look to mitigate leasing risk by incorporating a break clause, if turnover fails to achieve a minimum. This is usually in the second year and involves a penalty.
6. Fitout clawback provisions
Lease term where a fitout contribution is provided by the lessor and under certain circumstances, the lessor has the right to recover a percentage of the fitout contribution.
7. Adjust rent for atypical shapes and sizes
The front and back part of a shop, such as those with poor frontage to depth ratio (long and narrow spaces), have a different value. Compare to shops with similar shapes or adjust by a discount factor.
8. Access JAA Retail Tenancy Database*
Access a reliable set of leasing benchmarks in a de-identified database, including rents, incentives, bank guarantees and rent increases, to be able to negotiate better terms of your lease. This should then form the basis of your offer for a new site (or renewal), that will translate into costs savings. Includes kiosks and shops. Benchmark reports available only to JAA members who share their leasing data.
© Leasing Information Services Pty Ltd 2015