Negotiating a Lease for Your Retail Store

If you’re looking for space for your retail company, then chances are you’re going to be going through the leasing process—a process that can sometimes be very simple but is just as often rather complicated.

A lot of it depends on who you’re leasing from. Sometimes you’ll be able to get a good lead on retail space for rent from an individual, who simply wants to lease at a straight price with minimal negotiation. In other instances, you’ll be leasing from a major corporation, which comes with similar advantages: Big companies usually don’t allow much leeway for negotiation, which keeps the process streamlined.

If you’re working with a lease agent, though—a kind of middle man—then you should expect a negotiation process, possibly of some length and complication. That’s not a bad thing per se but it does require you to understand some basics of the leasing process. Here’s more information on negotiating a lease for your retail store.

Understanding the Terms

Start by briefing yourself on some of the following terms, all of which are usually included in a retail lease:

• The term. This denotes the amount of time you’re obligated to pay for the space, which is usually three years.
• The rental rate. This may be calculated per square foot or as a percentage of your gross sales.
• Maintenance responsibilities. The lease should denote which party is responsible for what, with regard to plumbing, electrical, heating, and air.
• Water and sewer are likely to be included in the rent; gas, electricity, and trash removal are likely to incur extra costs.
• “Tripe net.” This is an additional fee—usually monthly—that accounts for taxes, insurance, and common area maintenance fees. It may be rolled into the actual rent.
• Prepaid rent. Expect to prepay for at least a month, potentially three.
• Security deposit. This could be as high as two months’ rent.

General Tips for Lease Negotiation

In addition to these basic terms and concepts, also consider a few basic negotiation tips:

• Shop around. Contact several leasing agencies about different spaces and ask for their proposals. This will give you a sense of what the rates should be like in your area.
• Find a couple of good spaces. This can generate some competition among potential landlords, and also ensure that you have a fallback.
• Get an attorney involved. Don’t sign on the dotted line until you have a lawyer inspect your lease!
• Don’t hesitate to put in a counter-proposal. This might include lower rates, limits on the triple net charge, inclusion of certain utilities, or more. Include several of these points in your counterproposal, as you won’t get all of them.

Be savvy about your negotiations—and don’t settle for a space unless you know it’s right for your business.