Before you sign up to a shopping centre site, there are some points to consider...
I was speaking with a few senior executives of some of our largest coffee and cake franchise chains over the last few weeks, and asked the open question: “How are you finding dealing with the big shopping centres at the moment?”
The common thread is that times are relatively tough, and so franchisors are having more success in negotiating new lease deals with lower rentals than probably ever before. The last thing a shopping centre needs is vacancies, and the queue of “Ma and Pa” individual businesses wanting a site has reduced greatly, so the need to fill the big shopping centres falls back onto the retail chains.
If you want to secure a site, this puts you in a far better position than two years ago. One retail chain told me how they had been prepared to walk away from some locations and actually had done so. Playing bluff with leasing agents really only works when you are prepared to close some stores, and actually do so and walk away.
Whilst the very big centres can handle this, and possibly find new tenants, the medium and smaller centres quickly start to take on a look of despair if there are more than a few vacancies on the floor.
In some states, where the law forces the registration of leases (New South Wales for example), it is possible to find out what the other tenants in the building are paying.
Peter Buckingham is the Managing Director of Spectrum Analysis Australia. He is a certified Management Consultant, and a Fellow of the FCA and IMC.