How does Retail Leasing Work?
1. Determining the Budget and Space Size: The first step for the tenant is to determine the budget and how much space is needed to conduct the business. Figuring out budget and space is important to prevent unnecessary financial burden and wastage of space. On the other part, the landlord should list the property with real estate brokers, online dealers, and signage to make the property available for lease.
2. Conducting Initial Inquiry and Evaluating Potential Location: After determining the budget and space, the next step is to reach the landlord or the broker to grab the basic information about the available space, including visiting the site, size, location, terms, and rental rates. Moreover, it is important to evaluate the potential of the location and the foot traffic that impacts the sales, success, and customer base of the business.
3. Negotiation and Lease Agreement: Once the tenant decides and makes up his mind to lease the property and the landlord agrees to lease out the property to the approaching party, both parties then negotiate on terms and conditions including, rent structure, lease term, improvement allowance, maintenance responsibility, and other provisions. Once deciding upon these terms, an agreement is crafted that outlines the basic terms of the lease known as a ” Lease Agreement”.
4. Improvements and Occupancy: The landlord may improve or modify the space or premises as per the needs of the tenant and the lease agreement. The tenant takes possession of the retail space upon completion of such improvements. The rent is paid either upon occupancy or after a specified period as per the agreement.
5. Lease Management and Lease Renewal or Termination: Throughout the lease term, both parties manage the agreement by shedding off their responsibilities honestly. Once the lease expires both parties may agree to either renew the lease by negotiating and revising the terms of the lease, or in case of breach of the agreement, the lease may be terminated.