Case Study: Navigating Shopping Centre Leases
Flo & Frankie: Shopping Centre Lease Negotiation
Case Study No: 28
Optimising Shopping Centre Lease: A success story for Flo & Frankie
Flo & Frankie brings together the best fashion, design and lifestyle goods under one roof to help women feel confident at any age. They started in a standalone store on Broadway and is now expanding its store network throughout shopping centres in New Zealand.
In the competitive world of retail, securing a favorable shopping centre lease is a crucial step for businesses.
This case study highlights how Marcus, a leasing expert from Proactive Property Group, successfully negotiated a shopping centre lease for Flo & Frankie, a prominent brand in New Zealand’s fashion industry. Their journey showcases the significance of lease negotiation and the tangible benefits it can offer.
Flo & Frankie’s Challenge and Solution
Flo & Frankie’s interior designer recommended Marcus and Proactive Property Group to Flo & Frankie for their leasing knowledge and lease negotiation expertise.
The goal was to secure a shopping centre lease at a premium New Zealand shopping mall. Marcus initiated the process by meeting the shopping centre’s leasing executive to discuss the initial offer received by Flo & Frankie.
To ensure the best deal, Marcus meticulously collected and analysed market rental evidence from similar women’s fashion precincts within the shopping centre. Armed with this research, he formulated the commercial terms for Flo & Frankie’s lease offer.
These terms encompassed both financial and non-financial aspects, including contract rental, percentage rental, operating expenses, rent review structure, lease tenure, and more.
Tailoring the Lease for Optimal Results
Leveraging his experience as both a landlord and tenant, Marcus factored in Flo & Frankie’s costs across the lease lifecycle. He tailored the commercial terms to minimise property costs during entry, occupation, and exit phases, aligning with the brand’s predetermined cost threshold.
Marcus meticulously modeled the lease property costs and compared them against Flo & Frankie’s benchmark threshold.
This iterative process led to four negotiation rounds with the landlord’s leasing executive, resulting in the commercial terms meeting the cost benchmark.
The Client Outcome
Flo & Frankie’s engagement of Marcus yielded substantial benefits:
- Increased Landlord Fit-Out Contribution
- Reduced Annual Accommodation Costs
- Decreased Rent Increases
- Lower Bank Guarantee Requirements
- Waiver of Personal Guarantee Requirements
Furthermore, Marcus secured long-term savings by negotiating a competitive fixed percentage rent review. This strategic move ensured that the savings generated from a favorable base contract rental were compounded annually, leading to sustained cost benefits.
Conclusion
The success story of Flo & Frankie’s shopping centre lease negotiation with Marcus and Proactive Property Group exemplifies the importance of expertise in lease negotiations.
By meticulously analyzing market data, tailoring commercial terms, and securing favorable outcomes, businesses can substantially enhance their lease agreements.
This case study underscores how strategic lease negotiations can translate into significant, lasting benefits for retailers in the dynamic world of commercial real estate.
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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