Signing a lease? Read our checklist
What to know before signing a U.S. retail lease at the mall
Retail lease negotiations usually take one to three months to finalize. Navigating the leasing process is a big step and one you don’t want to commit to lightly. With that in mind, here are five tips to make sure you handle the leasing process with finesse and expertise.
Be a detective
To begin with, it is crucial for you to have a thorough understanding of the retail space's location, as well as the overall offerings of the mall, to ensure it is a good fit for your business. Ensuring that your target customers are visible among the existing clientele at the site is important, as well as taking the time to visit your designated space on various days of the week and at different times of the day – such as weekday afternoons and weekend nights – to gauge the actual foot traffic. It's not only important to research the mall itself, but also to familiarize yourself with its policies. For instance, be aware of the mall's operating hours, both current and during peak holiday seasons. Once you have identified the ideal location, you can proceed by requesting a Lease Proposal, also known as a Letter of Intent (LOI). This document summarizes the lease terms, marks the start of rent-term negotiations, and informs both sides of major terms and conditions that will be in a forthcoming lease.
Do your homework
It may seem obvious, but we strongly encourage you to read all the provided documents. We know that when a legal document lands in front of most of us with a bunch of legalese, our eyes may want to glaze over. Still, it’s key you always read the entire LOI and have a clear understanding of everything outlined in the agreement before signing. Look for things like term, delivery, and commencement dates, rent breakdowns, and more. Use our glossary to look up any retail leasing jargon you may not recognize. Pro tip: Make sure you understand all the dates outlined in the document and you feel comfortable that you can hit those milestones. You should be confident that you can open your doors on the stated date so that you don't end up paying unnecessary expenses like dark rent. And if you’re not confident with what you’ve just read, see Tip #4.
Consult an expert
You’re an expert on your business. Consulting an expert, if it’s within your means, is a smart move. Whether it's a skilled lease negotiator or attorney, we highly recommend seeking guidance from someone who specializes in retail real estate deals, especially for long-term leases. They can assist you in negotiating lease terms, liaise with your landlord's legal team on your behalf, and ensure that you fully comprehend the commitments you're about to make, as well as the landlord's obligations to you. This invaluable support will provide you with peace of mind throughout the process.
It never hurts to ask — and some items in your LOI can be negotiated. But be prepared, it’s not guaranteed you’ll be able to negotiate on everything — we all know that there are constraints in any negotiation. Asking for a counteroffer is a good practice and a great way to build a relationship and trust with your negotiating partner as you both figure out a compromise and find common ground.
Be ready with the details
After submitting a formal lease request, you will be asked to provide historical financial information about you and/or your business. It is best to get organized up front with the things you know you’ll need during this process. That typically includes two years of tax returns and a credit application, plus, if you’re using a business entity, you’ll likely be asked to submit your formation documents (like articles of incorporation) and two years of profit and loss statements. Ensuring you have these items readily available will streamline the process.
Now, you’re ready. There’s still a lot of work ahead, but rest assured you have done your due diligence about the lease negotiation process and hopefully now have a clear understanding of the commitment you have just made. Good luck! We are excited to see your doors open soon!