Every year millions of people commit to doing something different to improve themselves and their life for the coming year. The idea of a New Year’s Resolution is to change something you do (or don’t do!) to improve some aspect of your life that you’re not happy with.
Cutting out chocolate, avoiding the McDonalds drive through, joining a gym and riding to work are all lifestyle changes designed to improve your health and overall wellbeing. Other resolutions like getting a new job, going back to university and paying off the credit card are aimed at putting you and your family in a better financial position in the immediate and longer term.
So, what New Year’s Resolutions should you make for your retail lease to ensure it is healthier and more financially secure in 2018? Here are The Leasing Department’s Top 5 suggestions.
1. Complete a retail lease health check.
A general five-point health check on your retail lease will highlight what steps can be taken to save you money and put your business in a far healthier position for the new year.
2. Monthly lease performance analyses.
Mark a date in your diary each month to review the previous month’s gross sales data for your landlord and update your MAT (moving annual turnover) and occupancy costs as a percentage of your turnover. Monitoring these KPI’s regularly will allow you to proactively manage them just like you do your profit margins and stock turns.
3. Establish an 18-month critical path for your lease.
Diarising key lease events such as lease renewals, dates to exercise option terms and market rent review dates at least 18-months in advance of when they’re due allows you to leverage each event to put your business in the best possible position. They provide ideal opportunities to re-negotiate rent and possibly other terms of your lease with your landlord. Anniversaries of rent increases and key dates around when things like outgoings estimates for the next year and statements for the past year are also important dates to know if you’re going to keep your lease (and business) in good shape.
4. Know the time frames and processes for each lease event.
Knowing the time frames and processes around each lease event allows you to manage them proactively and maximise your position of power at the negotiating table. For example, if you have an option on an additional term, your lease will provide details of when you must provide notice to the landlord exercising your right over the premises for another lease term. Usually this is not less than 6 months and not more than 12 months before the end of the current term. Legislation can be slightly different in each state though. For example, if you are in Queensland, you have the right to seek an early determination of the market rent before you need to exercise the option term. This provides the tenant with additional leverage in the negotiations and places the tenant in an enviable position to negotiate the market rent they are prepared to pay. If that rent can’t be achieved, the landlord knows that the tenant still has the choice of not exercising the option and still has time before the end of the lease to source a new premises to rent on more agreeable terms for their business.
5. Speak with a tenant side retail leasing specialist.
To achieve the best outcomes for your retail lease in 2018 engage a specialist leasing partner – early! They can advise you on strategies to reduce your occupancy costs and can act on your behalf, so you have a skilled negotiator with expert knowledge of retail leases and the legislation in your corner putting you and your business on an even playing field at the negotiating table.
The Leasing Department can help you get your retail lease New Year’s Resolutions started right now!
Contact The Leasing Department by calling the National Retail Association hotline on 1800 RETAIL (1800 738 245) to take advantage of a complimentary 20-minute consultation available exclusively to NRA members.