Lease Option Variables
Are the tenants around your store attracting the same quality of customer, or is the new center nearby a more desirable location?
Some retailers do not take the time to consider the variables they should look at prior to exercising an option. For example, if you opened a store in 2015 and your lease was for a ten-year term with a ten-year option you have the opportunity to reevaluate your situation in 2025 prior to exercising your next ten-year option.
Ask yourself this question, “If I was opening my business this year, would I pursue my current location or would I prefer a different location?" If the answer is “a different location”, invest the time to contact other Landlords and seriously consider relocating your business. Once you have an alternate location in mind, consider contacting your existing Landlord and share your intent. They may allow you to lower your pre-negotiated rent or grant you another concession to keep you in the center.
The following list is self-explanatory, but if you have any questions, please contact us.
1. Do you have options in your existing lease?
2. When is your option notification date?
3. How do your option rents compare to current nearby market asking rents?
4. What is the condition of your current center?
5. Is the landlord willing to renegotiate your option terms within your lease?
6. What is your current sales trend? Going up or down?
7. Does your current lease require you to report sales?
8. Does your current lease require you to renovate if option exercised?