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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.
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.
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.
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.
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.
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)
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.
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.
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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