Before you set out to get a lease for your shop or kiosk from a mall, there are a number of things that you have to get right, so that you can be sure of a good deal with respect to your lease agreement, so that you can get everything right from the start, and also to safeguard yourself from the lease going awry.
Most malls set their rent per square feet or meters, so it is important that you ask about this beforehand. Ask whether there is any service charges involved in getting the lease, and if possible, whether the mall operators provide the AC for FREE of if this is included in the service or utility bills in the contract.
You should find out what the opening policy of the mall is in the event that the mall is yet to be opened. There are malls that open with 50-70% of the stores occupied, while others will only start operation with 30-40%, and later on replace some of the stores that are failing. On the same note, take some time and look into the track record of the company that is managing the mall, their operation history and how they handle their clients. Remember that not all malls are the same, and that some can take up to one year to really pick up traffic, while others can take up to three.
Take some time and speak to the neighbours to know how much they are paying for their service and utility bills and any other costs that they have to incur to do business. Are there any expected brands that will or might rival or complement your brand? Also take time and look into the entrances, the gates, and determine whether or not they are suitable for you. As you enter into contract negotiations, consider the length of the lease, and the action when the lease expires. There are mall owners who will demand in the agreement that you completely renovate the store after your contract expires, and this can really eat up into your profits earned so far. At the same time, it is also important that you find out if and how much the rent will be increasing per year.
There are some malls that for some reason have their own companies that carry out the repair and maintenance works inside the mall. The costs involved in such can usually be higher than you would have to incur if you hired your own contractors. Because of this reason therefore you need to look into this clause and find out whether or not you are able to handle the costs involved.
Most malls will set different rates depending on the time within which you intend to open your store. In the event that you are dealing in stuff like toys, November and December would be ideal months for you, but remember that you should have at least 6-12 months’ budget in order to be able to survive the challenges involved after you open your store.
Look into the terms and conditions before you sign any document. The pages might be long and boring, but they have a reason for that. If you cannot do it, get your legal advisor to take you through them one by one before you can commit. There are others where you will be required to set a security deposit, while others will want a profit or revenue sharing agreement. Also, consider whether or not there are controlled standards in place for making any renovations in the mall.
The nature of your merchandise will determine the type of the lease you are getting, and whether or not the mall in question is suitable for you. Try and talk with either the mall owner, the General Manager, Leasing Manager or whoever can get you as close as possible to getting a good deal, and understand the contract details.
It is important for you to negotiate a number of free months within which you will be carrying out some repairs, setting up your infrastructure and other structures in the mall. Be very keen on this because most malls offer it but only if you ask for it. Therefore, if you move in and start setting up, you will not need to start paying rent immediately. If you are making any changes or some construction work during the free months, be sure to inform the management if these will require some approval from external authorities. This is important so that you do not have to start paying for time while there is a delay in the approval process.
The termination policy is also an important thing that you have to look into. If you are to terminate the contract before it expires naturally, would there be a penalty, and how much would it be? Knowing about this will help you limit your liability. Consider the installation of the HVAC systems, and whether they are centralized or if you are supposed to install yours on your own? Besides that, find out whether there are enough parking spaces not just for your clients, but also for your employees if possible.
You can also negotiate with the mall owners the nature of the rent agreement once the contract expires. Will they increase the rent, and if so, by how much? This is important if you intend to stay in the mall for another lease period. The other thing that you should not forget is to find out if there is a penalty for not opening your store on the agreed time. If this is there, try and negotiate to shift the date later or to remove the clause altogether in the event that you are not so sure about when you will open. This is because in most cases the penalty is always more than you would be paying for rent.
