Just wondering how common it was for a center to only offer 7 year leases to their potential tenants versus a 5 year lease. I have 2 UPS Stores that are 5 year leases. I am looking to start a 3rd in a new development in Austin and the landlord is only willing to offer a 7 year lease. I do have a broker for this deal, but I was trying to get another opinion.
A building has the right to put any terms to a lease. Supply vs. demand, etc. That said, you can find shorter leases. The only thing is that retail can be a little less negotiable than office space due to the Store front's appearance, location, etc. Your broker didn't tell you this?
HEB....its a pretty sweet new development in Austin in the Mueller area right at the old airport. I would really like the store to be in that location, but the deal might not happen if the landlord can't come back with serious counter offers. They are asking for an arm and a leg after the leasing agent was kind of implying a reasonable price could be done. Edit...I might want to just shoot your friend a quick email to see if he can answer my question. Also, I don't get the greatest vibe from the broker we were recommended by UPS, but I am still sticking with him for now. I don't mean to imply the guy is shady, but it doesn't feel like he is being very serious either.
I know this, but I am not asking that. I am asking how common 5 year leases are versus 7 year leases. Like roughly what percentage of retail leases are 5 year leases and what percentage are 7+ year leases for non-anchor stores.
I mainly do Office leases, but in Houston the rule of thumb is between 3-5 year leases. 7 and even 10 years are out there, but are at a lower percentage.
My aunt has a store that the initial lease was required to be a 7 year lease. She's since renewed twice and they have both been 5 years.
I don't have an answer to your question, though would note that if it is an great new location your risk seems to be limited. Relative to if a so-so location was asking for 7 instead of 5. Especially if it is relatively easy to sub-lease per the lease. But I'm sure you know all that. I'd probably focus more on rate (and TI, if any) then lenght. Maybe even use the fact that your are "guaranteeing" the extra 2 years as leverage to get rate down.
My buddy at NewQuest would be the best contact then since he works with a lot of shopping centers and retail spaces. That's kind of NewQuest's thing-grocery store anchored retail space. Give him a shout, his name is Jon Jamison, contact info below on the link: http://www.newquest.com/Properties/Retail/5
