Posted on Saturday, March 29, 2014

How to Negotiate a Leasing Deal with the Leasing Department of any Mall?

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.

Posted on Wednesday, February 12, 2014

How to Find a Location for your Brand at the Mall?

Selecting the right location for your brand, as a business owner, is one of the most important things, you have to do, especially if you are setting up in a mall. Typically, malls are filled with lots of brands, some of which include competitors, irrelevant brands to your niche and complementary or others that supplement your brand in one way or the other. Selecting the right location for your brand deserves careful thought, lest you make a big mistake when setting up. The following are some of the simple things that you need to consider before you settle on a location for your brand in a mall

The Mall

One of the most important questions that you have to ask yourself is whether or not your brand will be able to fit in the mall. To do this you will have to conduct your research beforehand to determine the kind of competition that is available in the mall, or lack thereof. The size of the mall is also important, whether the mall is a big one or a relatively smaller one. Is the mall famous or not? Is the mall located in a tourist city?
Though not all mall management departments can do this, you can make attempts to enquire into the periodic visitor traffic that gets into and out of the mall. If possible, take your time and visit other malls so that you have an idea what they are offering as compared to the one you are interested in. Generally, a mall worth your time should have at least 10000-30000 visitors on a daily basis and again that depends on your brand and its location in the mall.

Before you get space in a mall, the management will usually ask you for a presentation of your business or company. In the process, you might have some forms to fill out as regards the space you want and any other details that the management might find necessary.
Once you have filled the forms expected, you will wait for the management to contact you. In most cases, they never do, but this does not mean you should give up either. However, in the event that you get a quick response from the management, chances are high that they are either struggling, or your presentation was just awesome.

Research

In order for you not to be overwhelmed by the process, it is advisable that you hire someone whose role would be to look through the prospective malls you are interested in to save your time. You can only come in once you have been briefed and the project is in the later stages.
It is important to note that you should not be too excited about the mall because this might influence the owner’s options out of your favor. You should still be aware that getting the location right does not always happen to everyone, as there are those who have managed to get stores in high traffic malls but still have not managed to break even. Things like the rent that you will pay should be related to the amount you make in terms of sales on a daily basis.

Demographics

At the same time, getting the demographics of the mall will also be an important element that you have to consider because you have to know the type of clientele that you are dealing with. From the nationalities to the ages, all this is important information that you have to get. You can also extend this knowledge to finding out the particulars of those who live around the mall and their age groups, the things they like, their cultural affiliations and so forth.

Competition

Competition is always the key to your brand location. There are brands that will thrive from the economies of scale associated with their competitors, especially in the tech sector. However, this does not always work for all businesses. Depending on how you want to work about your brand, proximity to your competitors can work both ways. Unsatisfied competitor customers can seek solace in your brand, while you might also lose some to the competition. This is a tricky affair though, but an important element that you must take into consideration.

Proximity

One thing that you can be guaranteed is that the mall is a pretty crowded place, full of people and stores. Therefore, you need to determine how easy to access your brand will be for your target buyers. All brand owners desire to have their stores easily accessible to shoppers and other clients so you should carefully consider this. Besides, the easier it is for clients to access your store the easier it will be for you to do business. Most shoppers also prefer stores where they can walk in and out very conveniently without feeling too claustrophobic.

Future growth

Is there room for growth for your brand at the mall? This is an important question especially if you are planning to expand the brand over the coming trading periods. If you hope to expand in the future, you should consider looking for an appropriate location that can allow you the kind of flexibility that you need.

Costs

Setting up a spot for your brand at the mall will definitely come with some costs involved. Chances are high that the spot you will get will not be business ready. Therefore, you will need to look into things like renovation costs, decoration, IT system installation and upgrades and such stuff. Once you already have such costs in mind, you can consider whether or not you can afford them comfortably while at the same time handling the requirements for setting up your brand.

Final take

Eventually the right location for your business will also come down to how much you are willing to pay for the store to lease it. You have to conduct enough research about the mall, the potential for growth, the owner’s perception on your line of business and other aspects that can determine the amount of money you will be required to pay for your ideal space.