Retail & Commercial Leases
3. The Needs of Your Business
Firm / Chambers:
Last updated: 29 Aug 2015
- Your main objective will most obviously be to develop a profitable business but other key objectives when entering into a retail or commercial lease might include:
- finding premises that will allow for expansion and growth if desired;
- ensuring the lease can easily be transferred or assigned to another person; and
- ensuring the premises are suitable to your business needs for the life of the lease including allowing your business to generate the requisite income.
- The location of your business can be an important factor in its success. When choosing a location carefully assess what environment is appropriate for your business and consider whether your business can benefit from the location. For example a location may be ideal for your business because:
- your suppliers or distributors are located nearby;
- it is a known centre for consumers of the products or services your business provides;
- many of the people who work or live in the area are the target consumers of your business;
- other businesses in the area complement yours; and
- it is a developing area in which commercial opportunities may present themselves in the near future.
- Consider contacting the local council to gather information about the socio-economic characteristics of the location you are interested in. Research the market for leases in the location you are looking at.
- Research the property and compare it with other premises before making a commitment. Ask a local real estate agent about their observations of businesses in the area in comparison with other areas. Talk to current tenants in the area you are looking at as well as the current tenants of your prospective landlord.
- Identify the shop features a business like yours should have and then look for a property best suited to those needs. Talk with other people in the same business as you and inspect premises where similar businesses are located. Be aware that you take premises as you find them so it is up to you to ensure they are fit for the purpose you intend or clarify with the landlord what types of fit-out will be acceptable.
- Enquire about the rental market in the area and the difference between buildings or shopping centres including locations within a shopping centre.
- Premises with street or mall frontage have a lot of passing pedestrians and will likely come at a higher rent than premises around a corner. If the premises do not have high foot traffic consider whether you will need to negotiate advertising rights into the lease agreement.
- Market research is a continuing job throughout the lease. It can assist when entering lease negotiations as well as negotiating a new lease or rent review with a landlord.
- When considering what your business can afford, remember to include ‘outgoings' such as costs for services like electricity, water, telephone, cleaning costs, day to day repairs, maintenance and advertising signage.
- Look at other businesses in the shopping centre or precinct and consider whether they will complement or compete with your business.
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