Step 1 Find a space
Jump on realestate.com.au, drive around town or take a trip to the shopping centre to find yourself a few suitable options for retail space. Leasing retail premises can be all about location, location, location. Look for “for lease” signs around town and search online until you have several sites to compare.
Step 2 Budget time
Retail shop leases will typically be advertised on a per square metre rate. However, in addition to rent, you will need to enquire about what other costs are involved such as:-
– Outgoings & Operating Expenses (such as the Landlord’s rates, insurances, repair & maintenance, cleaning etc);
– Bond or Security Deposit (typically this varies from 1-3 months rent);
– Turnover Rent (some shopping centre Landlords will also charge you a percentage of your turnover each month);
– Marketing Fund (some shopping centre Landlords charge an annual fee to contribute to the marketing fund of the Centre)
– Electricity, Water, Gas (are these utilities included in any way or are they separately metred items?).
– Insurance (most retail Shop Leases require you to take our your own insurance policies for public liability, plate glass, your property and sometimes even business interruption).
– Your telephone, internet, eftpos costs which are connected to the premises.
You will also need to allow for a months rent in advance ordinarily. From here, you should make a budget of what you can afford each month and then look at your list of possible retail shops to determine which is most affordable for you.
Step 3 Inspect the Retail Shop
We recommend you inspect the properties your interested in. Meet with the landlords or their Agents to get information on traffic counts, tenant turnover, leasehold improvements you can make and how long the lease term will be.
Step 4 Decide on the premises for your Retail Shop Lease
Decide on the premises you wish Lease and submit an Offer to Lease with the Landlord or the Landlord’s Agent. This should be in the form of a non-binding document (often the Agent will prepare this for you) and include all of the critical terms and conditions such as:-
– The base rent
– The Term of the Lease and a commencement date
– Options to Renew
– Allowances for fitout or your leasehold improvements
– The permitted use (and if this is exclusive);
– Car Parks;
– Rent free incentives and so on.
If you need assistance with these negotiations or wish for us to review your Offer to Lease document before you sign it, please let us know.
Step 5 Meeting the Landlords Requirements
Once you submit your offer, Landlords will generally require some supporting background information about you before they approve you as their new Tenant. You should be prepared to provide a statement of your assets and liabilities, some references and a resume or CV of your past business experience.
A holding deposit can also be requested when you make the offer, so you should budget for that from the outset. This will usually be credited towards the first months rent if the Lease proceeds or be refunded to you if it doesn’t.
You should notify your solicitor at this point that you have listed them on the offer as the lawyers that should expect to receive the Lease for review once the Landlords solicitor prepares it.
Step 6 Retail Shop Lease preparation and Lessor Disclosure Statement
In Queensland, once a Landlord accepts your offer to lease, they must provide you with a copy of the proposed Lease together with a Lessor Disclosure Statement at least 7 days before the Lease commences. The Lessor Disclosure Statement contains a summary of the Lease terms together with a breakdown of all the fees and outlays which will be charged to you which can sometimes be difficult to see in the Lease itself.
You must then use those 7 days to take legal advice from your solicitor and financial advice from your accountant. Each professional is then required to provide you with a Legal Advice Report and a Financial Advice Report respectively.
Your solicitor will help you complete a Lessee Disclosure Statement which must, along with the Legal and Financial Reports, be provided to the Landlord before you enter into the Lease.
Your solicitor will provide you advice on the terms of the Lease and sometimes recommend changes to better reflect what was in your offer or to protect you from any unreasonable or uncommercial conditions.
Step 7 Take Possession
Once the Lease is signed and ready to commence, start your fitout construction if necessary and move your retail products, furniture and equipment into the space.
Step 8 Signage and Grand Opening Party
Hang your shingle out the front as they say and put the champagne on ice ready for the grand opening. Oh yeah, don’t forget to invite your favourite solicitor down to the party.