Thousands of small and medium business entrepreneurs venture into the retail business annually in the United States alone. Usually, this involves getting a right premise to set up the business and getting a viable retail lease. For most people, the viability of the retail lease is simply gauged on the size of the premise and its condition. However, other considerations such as location, traffic patterns, support offered by the premise owner and hours of operations allowed on the premise need to be part of the lease valuation.
The value of the retail lease also needs to be weighed against the guaranteed people traffic of the premise location. Retail business by their very nature sells products or services to the end users. As such, the more people passing near the retail premise the more business the location is likely to fetch. In such a premise, the owner will ask for premium rent, which is justified mainly by the demand of the same premise by other retailers and the probability of successful sales on such a location.
However, before settling for a quoted retail lease, one needs to research about already established competitors operating within the same area. Some premises guarantee retailers that competition will be kept at the very bare minimum. This means that only a small number of similar businesses can be allowed to operate within a business establishment. The lease should state this, failure to which, one should seek clarification about the same in order to formulate a marketing strategy that will assure them of a significant share of the market.
What most retailers fail to realize is that most conditions in a retail lease can be negotiated. This involves talking to the premise owner about things such as the terms applicable to the lease and options of renewing the same, payments of the premises, terms of reviewing or increasing them, the permitted use of the retail premise and other facilities within it, operating expenses that could be shared with others and rights reassignment of a lease. Of importance also is discussing the rights and tasks of both the premise owner and the tenant.
During the negotiation stage of the retail lease, the premise owner must give the potential tenant the proposed lease and a disclosure statement that reveals any additional expenses that the tenant may undergo while operating the business from the premise. A person looking for a retail premise must also ensure that the lease clearly states a minimum term during which the premise owner cannot force him out of the premise. Another consideration that most people overlook is the responsibility of the owner to keep the premise in good working order subject to reasonable depreciation.
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