Like a Matryoshka doll, retail leasing is made of layers and layers of expertise. A retail expert will be familiar with the nuances of what is “market” for each type of transaction and why certain risks and issues are more important in some transactions, while not in others. In most negotiations, there’s a give and take process where no one side gets everything it wants. A good retail expert will be able to finalize your deal in a way that adequately protects you, knowing how to strike the right balance of understanding, explaining, and insisting on what you truly need and conceding what you don’t. And sometimes more important than all, especially in the world of real estate, doing it all quickly. There are dozens of different layers of nuances that play a role in each transaction. Here are five examples:
First, there’s the type of space. Negotiating a street location is vastly different than negotiating a lease in a shopping center. Negotiating a ground floor retail space at the bottom of a high rise office building is vastly different than negotiating an office lease in that same building. Negotiating a lease in a “Trophy” mall is vastly different than negotiating a lease in a Class B or C shopping center.
Second, there’s the type of people or entities involved. Negotiating a lease with an institutional landlord is vastly different than negotiating a lease with a local family business or even a highly experienced developer. From the other side, negotiating a lease with a mom and pop tenant is vastly different than negotiating a lease with a corporate national retailer with hundreds of locations.
Third, there’s the size of the space. Negotiating a 5,000 square foot lease (not to mention a 500 square foot lease) is vastly different than negotiating a 50,000 square foot “Big Box” or “Anchor” lease.
Fourth, there’s the market and submarkets of the space. Negotiating a lease in New York is vastly different than negotiating a lease in Chicago. Negotiating a lease in downtown L.A. is vastly different than negotiating a lease in Beverly Hills.
Fifth, there’s the timing of the deal. The negotiation process changes significantly when there is a rush for one side to finalize the deal for various reasons such as financing, the need for speed to open in certain markets, grand opening issues, Wall Street pressures, or a sense of a changing market.