Case Study: Flo & Frankie - Shopping Centre Lease Negotiation

Lease negotiation

shopping centre lease negotiation

Need to to negotiate a shopping centre lease?

Flo & Frankie brings together the best fashion, design and lifestyle goods under one roof to help women feel confident at any age.  

Flo & Frankie started in a standalone store on Broadway and is now expanding its store network throughout shopping centres in New Zealand.

Flo & Frankie’s fitout manager recommended Marcus and Proactive Property Group to negotiate Flo & Frankie’s shopping centre lease based on their leasing knowledge and lease negotiation expertise.

Flo & Frankie engaged Marcus to negotiate its shopping centre lease at one of New Zealand’s premium shopping malls. 

Actions Taken:

Marcus met with the shopping centre’s leasing executive to introduce himself and discuss the initial offer received by Flo & Frankie.

Marcus then sourced and reviewed market rental evidence of similar premises within the women’s fashion precinct at the centre to compare with the offer received.

Armed with his research, Marcus formulated the commercial terms for Flo & Frankie’s shopping centre lease offer.  The commercial terms included:

  • Key Financial Terms – contract rental, percentage rental, operating expenses, marketing levy, rent review structure, landlord approval fees and the landlord fit-out contribution;
  • Non-Financial Terms – lease tenure, rent-free fit-out period, commencement date, guarantee obligations, and reinstatement obligations.

Based on Marcus’s experience negotiating and managing lease portfolios from both a landlord’s and tenant’s perspective, he considered Flo & Frankie’s costs throughout the entire lease lifecycle. Accordingly, he adjusted the commercial terms of the shopping centre’s offer to manage and minimise Flo & Frankie’s property costs during the entry, occupation and exit phases of its lease lifecycle.

Flo & Frankie had a property cost benchmark threshold it did not want to exceed.

Marcus modelled-up the lease property costs and tabulated the commercial terms and resulting property cost against Flo & Frankie’s property cost benchmark threshold.

There were four rounds of negotiation with the landlord’s leasing executive to get the commercial terms for Flo & Frankie’s shopping centre lease below the benchmark threshold.

Once the commercial terms were agreed upon, the shopping centre forwarded its Agreement to Lease and Deed of Lease documentation to Marcus for review.

There was a subsequent negotiation on the commercial aspects of the leasing documentation to align them with the agreed commercial terms and minimise the cost and operational impacts on Flo & Frankie.

The Client Outcome:

The outcome for Flo & Frankie was that Marcus negotiated:

  • An increase in the landlord’s fit-out contribution
  • A reduction in the total premises accommodation cost per year
  • Reduced rent increases
  • A reduction in the bank guarantee requirements
  • A waiver of the personal guarantee requirements

Marcus also locked in the annual accommodation cost savings by negotiating a competitive fixed percentage rent review. This means that the yearly savings generated from an initially low base contract rental are carried through each subsequent lease year, compounding the annual savings.

Client Testimonial:

“Marcus and Proactive Property Group was recommended to me to negotiate our shopping centre lease at a major shopping centre.

Marcus took the time to understand our business requirements and then translate them into a competitive lease offer.  Marcus provided detailed rental market intelligence that enabled us to benchmark a competitive lease offer, then was able to negotiate the lease offer with the centre leasing executive to successfully close out a viable lease deal for us.

He was able to review our lease documentation and negotiate the fine print to minimise cost and risk to us throughout the lease term.

Marcus is an experienced property expert and lease negotiator who saved me time and money, providing practical advice, market insight, as well as lease negotiating expertise to level the playing field.  Working with Marcus enabled me to continue focusing on the business, and not lose momentum on the lease negotiation, knowing he was taking the time to oversee it thoroughly throughout the whole process. 

I would recommend Marcus to other businesses who want to remain focused on their retail businesses, without the constant distraction of lengthy negotiations. 

We are now engaging Marcus on our other lease transactions, as we have valued his support and the positive outcome as a result of working closely with him”

David Smith

Director

The Cosmetic Company NZ Ltd / Franchise Property Limited

Client Testimonial:

“Marcus and Proactive Property Group was recommended to me to negotiate our shopping centre lease at a major shopping centre.

Marcus took the time to understand our business requirements and then translate them into a competitive lease offer.  Marcus provided detailed rental market intelligence that enabled us to benchmark a competitive lease offer, then was able to negotiate the lease offer with the centre leasing executive to successfully close out a viable lease deal for us.

He was able to review our lease documentation and negotiate the fine print to minimise cost and risk to us throughout the lease term.

Marcus is an experienced property expert and lease negotiator who saved me time and money, providing practical advice, market insight, as well as lease negotiating expertise to level the playing field.  Working with Marcus enabled me to continue focusing on the business, and not lose momentum on the lease negotiation, knowing he was taking the time to oversee it thoroughly throughout the whole process.

I would recommend Marcus to other businesses who want to remain focused on their retail businesses, without the constant distraction of lengthy negotiations.

We are now engaging Marcus on our other lease transactions, as we have valued his support and the positive outcome as a result of working closely with him”

Chrissy Conyngham

Founder aka Mama Flo

Flo & Frankie

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