Securing and maintaining a commercial tenancy aren’t always easy processes. For one, landlords and tenants have different motivations. For the landlord, owning commercial property and leasing space to tenants are their primary goals.
For the tenant, leasing space is not the primary goal. Instead, they should focus on running a profitable business or providing great service. The property is a place to attract customers to your business—it’s not an end unto itself. Bar tenants don’t always want to lease space; it’s simply a requirement if they want to see their business goals come to fruition.
Therefore, landlords and tenants are not equal. The tail can’t wag the dog. If the landlord is the dog, then the tenant is the tail. And, as we know, dogs chase their tails. Consider that a commercial tenant typically only has one landlord, whereas a commercial landlord may have hundreds (or even thousands) of tenants. The relationship between a tenant and landlord is not like an equal marriage with common goals.
It amazes us how, during the leasing process, many landlords avoid meeting their tenants and most tenants avoid meeting the landlord. When it comes to new lease deals, often there’s a real estate agent (or two) brokering the deal between the parties. Rarely, in our experience, does the agent try to bring the landlord and tenant together to meet personally or to even talk by telephone. Being busy is no excuse.
If a tenant isn’t creating a relationship with the landlord and making deposits to that relationship, how can the tenant expect to make a withdrawal when they need a favor? A personal meeting with a landlord can work well for bar tenants approaching their lease renewals; this meeting will give you a better chance to talk, remind the landlord of your leasing history with him, and ask questions.
How can you encourage the landlord to take you on or keep you as a tenant? There are a few methods.
Sweeten the Pot. Why not consider giving a gift certificate for your business? This can help make you look good.
Explain Your Business Concept. Don’t assume that the landlord understands anything about your business. Depending on his age, marital status, and other factors, the landlord may or may not be familiar with your business and/or your offered product/service. Your bar may also be targeted at a certain demographic or carry an exclusive, premium, or imported line of alcoholic products that sets your bar apart from others. Be prepared to clearly demonstrate these aspects.
You may, however, have your tenancy request rejected. This may be done for any number of reasons.
You Don’t Fit the Mix. Often, a smart landlord is striving for a specific tenant mix within his/her property. Consider that if a landlord is developing a retail plaza, they may want a medical complex or a service-focused plaza, and their vision does not include your type of planned bar.
They’re Holding Out. Landlords may also prefer to hold out on leasing space to a bar owner geared towards the broader population and look for a higher-end restaurant that attracts more affluent customers or perhaps a chain with a more recognizable brand name.
Credit Considerations. Landlords sometimes reject tenants who have insufficient capital or bad credit scores. We have also seen landlords turning away prospective tenants who desire to lease less than the available commercial space.
If you want to save yourself a lot of time kicking tires on different properties, find out what the landlord wants right up front. Ask the agent, “Do you think the landlord wants a bar owner tenant for this property?” The agent’s answer will let you know if the landlord does or doesn’t want your type of business in his property.
Lease renewal requests can also be turned down. The landlord may prefer another type of tenant in the property or simply need your commercial space for your neighboring tenant who wants to expand (even if you are a stable, rent-paying tenant, the landlord may lean towards working with another tenant who wants to grow his/her operation).
By Dale Willerton and Jeff Grandfield -The Lease Coach, who are Commercial Lease Consultants who work exclusively for tenants. They are professional speakers and co-authors of Negotiating Commercial Leases & Renewals FOR DUMMIES (Wiley, 2013). Got a question or need help with your new lease or renewal? Call 800/738-9202, e-mail [email protected] or visit TheLeaseCoach.com. For the free CD, Leasing Do’s & Don’ts for Commercial Tenants, e-mail [email protected]ch.com.