Among all of the costs associated with running your retail business one of the biggest expenses, without a doubt, will be your retail space rental costs. The lower you can get your overall retail space costs the more profits you will make. Lowering your rental costs is not impossible however depending on whether you are in a landlords market or a tenants market it can be challenging if you are trying to do this on your own. Whether you are an independent retail business or a franchise below are negotiating strategies that can help you lower your monthly rent.
Start your process early – There are a lot of details to take care of. Whether you are leasing retail space for the first time or want to renew an existing one negotiations should begin at least 6-12 months before you want space or before your existing lease expires. If you can’t get a good renewal rate and decide to relocate would you rather know this 6 months before or 6 weeks before your lease expires?
Create competition – Even if you don’t want to relocate your retail business shop around and see what other options are out there. Request proposal from landlords. You can use these as leverage when negotiating with your existing landlord.
If you have time take your time – Leasing retail space is a process and not an event. Many retail owners and franchises often rush to find space and move in quickly and end up leaving money on the table. If you be patient and take your time you have a much better chance at negotiating more concessions such as free rent and tenant improvement allowances.
Ask a lot of questions – Whether a retail landlord has just purchased the property or has owned it for a long time be sure to ask a lot of questions. What are their plans for the property? Are they intending to sell it soon or renovate and hold it? How long have some of the other tenants been there?
Talk to other retail tenants – Walk around the retail shopping center and talk to some of the tenants. What is their experience with the landlord? What sort of retail lease concessions did the landlord offer them to renew or open a new business? How well does the landlord take care of the property?
Find out if new tenants are receiving perks to move in – If you are an existing tenant that has been there a long time and have a renewal coming up talk to the new tenants coming in and find out if they are receiving perks to move in. As an established retail tenant who has paid rent on time you should also be offered the same perks and lease concessions.
Ask for more than you need – When negotiating retail leases you always want to ask for more than you need. If you need 5 months of free rent then ask for 8. Avoid asking for what you are prepared to accept. By asking for more concession than you need you put yourself in a position to strategically give and take depending on how important the items are to you.
Negotiate non rental items – Do you need reserved parking in front of your space? Do you need more strategically placed signage? Would you like your deposit back? There are many other things besides rent that can better your bottom line.
The best advice for negotiating lower retail space rent is to hire an experienced commercial retail advisor who can do this for you. Doing this takes time, experience, and patience. Landlords hire experienced commercial real estate agents to negotiate on their behalf so it would behoove you to do the same. Remember…….you don’t get what you deserve…….you get what you negotiate!