The Ins and Outs of Leasing a Space in the Mall

Leasing a mall space can be a pivotal decision for businesses aiming to enhance their brand, drive sales, and set themselves on a trajectory of success. However, stepping into the commercial leasing sphere without the right knowledge can lead to pitfalls. Here's a guide based on the experiences of many who have navigated this path:

1. Grasp the Lease Terms:

It's vital for businesses to understand every clause before making a commitment. Many entrepreneurs have faced unexpected expenses because they overlooked or misunderstood terms. For example, some have found themselves unexpectedly responsible for maintenance costs like air conditioning repairs. Thus, before signing on the dotted line, one should ensure they're well-acquainted with all responsibilities and hidden costs.

2. The Significance of Location:

The right location can be a significant boost to business. High foot traffic and visibility can be critical. When choosing a space, it's essential to consider these factors. Something else to factor in is your target audience and any local competition you may have. 

3. Adapting to Mall Dynamics:

Malls have their operating schedules, meaning individual stores don't set their hours. This requires businesses to adapt by aligning staffing and stocking practices with the mall's hours.

4. The Breakpoint Concept Explained:

A common feature in mall leases is the 'breakpoint'. Beyond a base rent, once sales surpass a certain threshold, an additional sales percentage gets added to the rent. It's crucial for businesses to negotiate this breakpoint to ensure they get favorable terms that won't cut too deeply into their profits.

5. Lease Duration and Its Implications:

While some experts suggest a short, 12-month lease for newcomers, others advocate for a longer-term commitment. A three-year lease, for instance, signals to landlords a business's dedication. This commitment can offer a company leverage in negotiations, potentially leading to benefits like reduced rent or assistance with store setup. Plus, longer leases often come with options like subleasing for flexibility.

6. Anticipate Rent Increases:

Most mall spaces come with the caveat of annual rent increases. It's paramount for businesses to be clear on these terms from the outset and, if possible, to negotiate favorable conditions. Businesses may also consider applying for a grant or loan to help the venture grow quickly.

7. The Benefits of Commitment:

A long-term lease often results in better negotiation power. Landlords, seeing the business's commitment, might be more willing to offer favorable terms, from reduced rents to store setup assistance.

8. Consider Testing Temporary Spaces:

Before diving into a long-term lease, businesses might consider testing the waters with temporary spaces. These spaces can be strategically located near seasonal installations such as Santa, the Easter Bunny, or Halloween photo stands. Such locations see a surge in foot traffic during specific seasons, giving businesses a taste of the mall environment and helping them gauge the potential of a more permanent location.

Getting Started in the Mall

Leasing a space in a mall is a significant venture, one teeming with opportunities but also challenges. With diligent research, an understanding of lease terms, smart negotiation tactics, and perhaps even a trial period in temporary spaces, businesses can ensure they're making informed decisions that set them up for success.