Rarely have UK businesses experienced more uncertain economic times than these and it seems to have affected retailers particularly hard – but there are always opportunities to be harnessed if you know how to negotiate in the marketplace.
It could be said that the Brexit vote is playing somewhat of a role in the instability, with even experts unsure how it will affect investment, trade and economic prosperity. But more significantly there are underlying trends that were already becoming apparent before this vote which are playing an important role. Changing consumer habits have had a monumental effect on retailers, and therefore owners of retail properties – the changing purchasing habits of high street vs shopping centres v retail parks vs internet and where this will go in the future.
But with plenty of uncertainty in the market, one person’s challenge is another person’s opportunity. It seems clear that businesses that can be flexible and adjust to changes and extract opportunities from them, stand a stronger chance of riding out the storm and thriving in tomorrow’s retail landscape.
A crucial pillar in remaining flexible is managing property assets effectively. Property occupational costs are likely to be one of the most substantial overheads along with stock – but getting the best value and most flexibility from transactions and lease agreements will ensure agility and adaptability in this ever changing market. Selecting the wrong location, and / or being tied into lengthy and inappropriate leases can have a significant impact as property can become a burden on the business; cash flow and the ability to adapt to changing market conditions.
This is where seeking the right commercial property advice from a chartered surveyor who specialises in retail property can play a crucial role. Assisting in property transactions and negotiations can help your business remain nimble and react to changes ahead.
Key considerations for getting the most from your property should include:
Location, location, location
Finding the right premises in a suitable location can at times be a challenge – especially with changing consumer trends and habits it is now more important than ever to be in the right place for your business.
Commercial property surveyors have the market intelligence, regional knowledge and industry specific experience to forecast trends and recommend a location that can provide the business with the best value over time. Ensuring that objectives for the location are met without having to make too many compromises.
It’s often the case that the location you want and the location that you can afford are two different things. But don’t rule out the perfect location or property just because of the cost – economic uncertainty gives you the opportunity (with the right expert on your side) to possibly negotiate and secure opportunities that previously might not have been achievable.
Lease terms
The terms of any lease always need to be carefully considered before Heads of Terms are agreed. These terms are likely to dictate how flexible and agile you are able to be as a business. In the past many business owners accepted the terms of the lease without negotiating as they did not want to lose the property that they wanted. But this is a different retail landscape that we see before us today and negotiating has become an important part of securing not only the property you want but also on the terms that you want. Seeking professional advice will give you the ability to understand what areas of a lease can be and should be negotiated, to secure the best deal and give the business the best start.
When it comes to the lease, an expert can negotiate on your behalf on what’s best for your business and how you can achieve it. This covers many aspects of your lease agreement such as break clauses, and pre-emption rights; rent reviews and assumptions and disregards; repairing obligations and service charge provisions; alienation provisions and stamp duty land tax, which varies depending on the length of the term and the total rent.
A further advantage is that you are able to be more detached from the transaction; this allows you to focus on the other important areas of your business and optimising its agility in the market. Meanwhile, you can be assured that your surveyor will be assertively working on your behalf to secure the best deal for you.
Occupational costs
An overriding concern when considering taking on new premises, will be the total occupational costs – including rent, rent free periods, capital contributions, rates and service charge. In any business, maintaining sufficient cash flow is key to its survival, therefore how much you pay for the building, and when you pay the sums will be key to the future of the business.
Whilst it may seem that there is little room for negotiation on rent, it’s worth seeking professional advice as knowledge of the local and national market conditions, as well as the future trends, can result in knowledge being a powerful tool.
If you are considering taking a lease on a commercial retail property and want the assurance that you are getting the right property, at the right price on the right terms – get in touch with one of our commercial property experts to have a chat, it could save you more that you might think!
