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Old 10-11-2014, 06:19 PM
 
Location: Newport Beach, California
33,336 posts, read 20,124,483 times
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I am not sure if this is the right forum to post this topic.

I just started a dollar store in October in a shopping mall. 3000 sqt store and the traffic is amazing.

I am doing okay but I wonder if I should sign a longer lease. Right now I am on a yearly leaser. But the mall manager is pushing me to sign a 10 year permanent lease.

Do any of you own a business, especially a retail business? Do you still feel you are running a profitable business? Should I make a long term commitment?

This business is profitable so far. But a ten year lease sounds scary. Any suggestions? Thanks.
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Old 10-11-2014, 06:54 PM
 
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I'd go ten year with a 3 year termination option, couple with an "anchor" term option.

Varies by market, but retail space is on the upswing. A long term lease (should be for 90-95% of what your current rate is) can help lock in that lower rate - with the 3 year term option providing a safety valve.

Always, always, always include an "anchor" term option that allows you to terminate the lease if an anchor space in your center is vacant for more than 60-90 days.
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Old 10-11-2014, 06:57 PM
 
Location: Newport Beach, California
33,336 posts, read 20,124,483 times
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Quote:
Originally Posted by RoadWarrior12 View Post
I'd go ten year with a 3 year termination option, couple with an "anchor" term option.

Varies by market, but retail space is on the upswing. A long term lease (should be for 90-95% of what your current rate is) can help lock in that lower rate - with the 3 year term option providing a safety valve.

Always, always, always include an "anchor" term option that allows you to terminate the lease if an anchor space in your center is vacant for more than 60-90 days.
Thank you so much.
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Old 10-11-2014, 06:57 PM
 
7,238 posts, read 10,900,774 times
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I'm not a business owner, but a 10 year lease seems way too ambitious to me, especially given the unstable economy and how cyclical the retail industry is, particularly for small businesses.

I can maybe imagine that type of lease for a large anchor like Macy's or JCPenney, but not a smaller tenant such as yourself.

That's just IMHO though...
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Old 10-11-2014, 07:05 PM
 
Location: Moku Nui, Hawaii
9,690 posts, read 18,880,003 times
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10 year lease for a dollar store? Aren't those usually the businesses in areas that aren't exactly thriving? I'd not sign unless there was some way to break the lease. Pay three months rent and get out of it or some such. Ten years is too long for a low end business that is most likely in a marginal business space.
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Old 10-11-2014, 07:32 PM
 
9,266 posts, read 11,849,807 times
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Quote:
Originally Posted by lilyflower3191981 View Post
I just started a dollar store in October in a shopping mall. 3000 sqt store and the traffic is amazing.
Is this a franchise of a national brand or a Mom & Pop operation?

What is your experince level in retail?

How has the traffic flow been over the last 10 years for the mall and your location in the mall?

What are the terms of the lease that provides a safety net (such as the 3 year option to terminate like
RaodWarrior stated).

What is the demographics of the neighborhood and the mall traffic?; does it match your client base?

Geez; there are so many other things to consider like lease transfer options, true-ups, etc so honestly this would probably be better suited for your accountant and business partners.

(As an FYI, long term leases in business are common because it ensures stability for the business at a location and long term cost projections)
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Old 10-11-2014, 07:33 PM
 
Location: Newport Beach, California
33,336 posts, read 20,124,483 times
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You both make very valid points. But dollar store is actually a pretty profitable business. I already am thinking about expanding my business.

I am still pretty young, so from now to the time I retire, I still have at least 30 - 40 years to go. But I have to make sure (like one poster pointed out) that I have the ability to break the lease if I absolutely have to.

I am still debating.
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Old 10-11-2014, 08:19 PM
 
Location: Somewhere in America
12,304 posts, read 10,774,658 times
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I wouldn't rush into anything without speaking to your attorney and accountant.
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Old 10-12-2014, 01:37 AM
 
Location: Pac. NW
2,021 posts, read 1,524,358 times
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Sign the 10 year.

The commitment will force you to make it work if nothing else. Sometimes you have to jump out of the plane and trust that the parachute will open before you hit the ground.
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Old 10-12-2014, 04:45 AM
 
18,367 posts, read 23,541,961 times
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ask to lock in preferable lease rates for ten yrs, see how that goes, also it carries if mall is sold

id push for a 5 yr lease, too many unknowns, from competition coming in,,,to roadwork detouring traffic

lily, if you are doing well, sit tight, enjoy it
don't expand unless you have a bundle of money

15 yrs ago maine had no dollar stores, now we have them everywhere,, but not only one,,,other dollar stores seem to gravitate towards ones that may be doing well


id also talk to the other store owners, get a feel of how secure/long term they are,,,they may even share some lease rates with you and c.a.m. charges
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