The Leasing Formula

I am by no means a leasing expert (yet) but I sure am having the greatest of times learning from Matthew Abdo and Gideon Nhamoinesu REIQ , our in-house leasing gurus. Having come from a background where I was on the receiving end of an instruction to draft a lease, I never put much thought into the metrics that go into that final decision by a landlord to onboard a tenant. One question I often come across in my interactions is how prospective tenants can get space at our retail centres across the region. The “how” is pretty simple- contact us on [email protected] . But the real questions behind the question are what are the key considerations that inform the success of a tenant application? What motivates the Landlord to go with one brand over another?

Notice how I said BRAND? that all-encompassing package that sets an offering apart. Does the market know who you are and what are you associated with? In the age of free to very cost-effective online marketing solutions, internet presence is definitely one key indicator. That is not to say chances cannot be taken on the start-ups. In that case the question would be, what is the vision? Is there a business model that supports that vision? -I think of it as a Shark Tank situation. In the least amount of time or words possible can you convince a panel to go with your business over the next?

You might be asking yourself why one would stress over a vision board or branding, -surely the Landlord is only concerned with a bank statement which demonstrates financial capacity to pay rent right? WRONG, while a healthy bank statement would not hurt, in the world of retail, you often come across turnover leases which guarantee returns for the Landlord as a share of the tenant's income. In that regard, tenant performance is everything. So, the key considerations there are the longevity, profitability and viability of the tenant’s business over a projected amount of time.

Other considerations are:

• the tenant's Credit History. From a business point of view, no-one knowingly enters into a contract with a historically bad debtor.
• the retail centre’s Geographical Position also informs the desired tenant mix in that certain brands might not necessarily appeal to the desired target market. For example, in a predominantly Muslim community, one would not expect a Landlord to promote an establishment whose main selling points are all you can eat pork ribs- So sometimes it’s really not you! In a different location “all you can eat ribs” would certainly be a firm favourite.
• Brand Appeal. Yes we’re back there, but this is in relation to the tenant’s overall look and feel. Are existing tenant sites appealing? Is the fit-out shabby or does it scream I deserve full frontage in your mall? Remember the Landlord also wants to be proudly associated with “look good” “feel good” type of tenants. ?
• Lastly, in leasing for a retail centre, I have found the professionals to always consider a complimentary service offering. It would be counterintuitive to have too much of the same thing as this creates a situation where other tenants are cannibalised in the process. So sometimes that “no” will really save you the long-term heartache of being pitted against too many similar brands.

These are my humble submissions so far; I trust someone out there has been answered.