Property Services

Good landlord relationships, a must……!

I was recently speaking to a leasing executive friend of mine who is with a large retail property trust  – we were discussing various issues within the industry, in particular retailer relationships and people who do what I do, negotiate leases on behalf of retailers.

After some banter, the leasing executive became quite serious and said that he really didn’t like dealing with certain lease negotiators and some retailers. When I asked why that was the case, the leasing executive said they were just too difficult to work with and were often abrasive. At first I thought he was having a tacit jab at me, but thankfully he assured me that he was talking about a handful of individuals within the industry, not myself.

His comments struck a chord with me though, so I thought it was worth writing about the importance of maintaining a good relationship with your landlord and/or agent.

Whether your landlord is a small private investor who is represented by an agent or a large retail property trust, it is absolutely vital that you try to maintain a positive and harmonious relationship with whomever you deal with. Why is it important ? Well the simple fact is a large part of owning and running a successful retail business is having good real estate that you can retain for as long as possible. Unless you own your retail property, it is pretty obvious that you will need to lease your premises and pay rent to a landlord. If you have a poor relationship with your landlord/agent, then there’s a possibility that they might not renew your lease when it comes to expiry.

Even if they do offer a new lease, they might try to negotiate unfair commercial terms such as a large increase in rent. If you are exercising an option, there are legislative mechanisms in place in most states and territories in Australia that offer some protection, however it will nonetheless be a difficult process when it comes to negotiating a new market rent with a landlord who is offside.

Of course there are real advantages in having a good relationship with your landlord. For example if your business goes through a rough patch or you experience a personal issue, your landlord/agent might be more flexible on the odd occasion that you might have to pay your rent a little later than usual.

When it comes to a shopping centre environment, I can confidently say, retailers who were “pro centre management” definitely reaped rewards compared to retailers who were continually at odds with  management. Having over 20 years on the landlord side of the equation, I can attest to the fact that “good retailers” always received more generosity in terms of marketing assistance, flexibility in rent payments, assistance with maintenance issues and being offered new leasing opportunities.

The opposite was true when it came to dealing “problem retailers” – this is not to say that difficult retailers were not afforded all the rights that any retailer would be entitled to, it just meant that we’d think twice before going the extra mile for these retailers, I mean why would we reward poor behaviour?

When you think about it, this is a natural human reaction – if people show generosity of spirit, are courteous and polite, nine times out of ten, these people are going to receive the same type response in return.  Of course if a person is antagonistic, aggressive and continually negative, it makes it very hard to show generosity towards them.

We should always think about the old proverb, “you catch more flies with honey than with vinegar”….