For beauty business news, beauty store owners turn to Beauty Store Business. Beauty business trends, beauty business profiles and more!
Issue link: http://beautystorebusiness.epubxp.com/i/536106
88 August 2015 | beautystorebusiness.com START EARLY When should you start planning your own strategy for landing a better deal? Early, according to the experts. "Time is your friend in real estate," says Himmel- stein. "The earlier you can start thinking about renewal the more advantage you will have over the landlord. Relocating a retail store takes a lot of time, so if you delay until three or four months before lease expiration, the landlord will have the upper hand." Start too early, on the other hand, and you may find yourself locked into your current spot when a better location becomes available. So what's a good compromise? "The short answer is one year in advance of the lease expiration," advises Dale Willerton (TheLeaseCoach. com), a Los Angeles-based tenant lease consultant and author of Negotiating Commercial Leases and Renewals for Dummies. "But there is a caveat: If you have a renewal option clause, you want to be sure to start at least six months before that." The option might not be your best choice (as we will see later) but you still want it as a backup. "The renewal option clause is your fail-safe, your insurance," Willerton adds. Before you do anything else, double- check your lease expiration date. Get that wrong and your chances of a successful negotiation plunge. And it's easy to make a mistake when the passage of time impairs memory. "The day you opened your store is not necessarily the day your lease expires," cautions Willerton. IMPROVE TERMS If your lease is like most others, it calls for a five-year term and one or more five-year renewal options. But the renewal option—while designed to offer some protection to the retailer—is not necessarily your best choice. "One of biggest myths is that the only way to renew your lease is to exercise your renewal option clause," says Willerton. That's not the case, and in fact if you do so you suffer a significant downside: Everything but the rent amount will be off the negotiating table. That's a lousy negotiating position to be in. It's no wonder then that in 98% of the lease renewals negotiated by Willer ton the renewal option is not exercised. "Bear in mind that most of the time the landlord wants you to stay. That gives you some negotiating leverage. You lose that, though if you exercise your renewal option." We'll get to what can be negotiated later in this article. CREATE A "PLAN B" Once you have determined your lease renewal date, put yourself in a better negotiating position by locating alterna- tive store locations you can move to if your landlord's terms aren't to your liking. "The most-common mistake is to only negotiate with the existing landlord on the current location," says Willerton. "Doing so fails to give the landlord a reason to give you a good deal." The problem worsens if you tip your hand by letting the landlord know you are not shopping around. "Suppose your landlord asks if you're looking at other properties," poses Willerton. "You might respond, 'Oh we don't want to move— we are not talking with any other land- lords.' Right there your landlord has you." It's far better to line up some alterna- tive locations where you can relocate if your landlord becomes unreasonable. "You need to create some competition for the landlord," says Willerton. "Ask yourself: Where would I go if I have to move? Do I have relocation options if this landlord plays hardball and doubles my rent?" Having alternative locations gives you the freedom to reject oner- ous terms. "Tenants only get the best deals when they walk away from the negotiating table—not when they are at it," says Willerton. "Remember that landlords always hold something back that they will give up only if it's clear the retailer might move." Indeed, having the landlord chase you as you are walking away from a deal is the best position to be in. "The tenant is the landlord's customer, and the customer deserves to be pursued," says Willerton. "Many tenants do not understand that." TALK IT UP What's the going rate for retail space in your city? Maybe it's changed since you last shopped around. You want to find out early in the negotiating process. "Do your due diligence," advises Sharon %HWZHHQFRORU UHVFXHNLW J ; R I ; = D H L D v 9 D I ; F ; : ) ' 8 2 & 2 / 2 5 3 2 7 6 ) 2 5 $ 3 ( 5 ) ( & 7 0 $ 7 & +