REAL ESTATE
(CAM) charges. You could also
find yourself walking into a lease
where impending refurbishment
or building improvement costs
could be payable by the tenant.
If there has been a high turnover
of tenants in the past, for any
reason, this should raise a big
red flag for you.
This point is particularly
important for a potential
franchisee to investigate,
particularly when a previous
franchisee occupied those
premises.
Also, check if a similar-use
tenant previously leased space
within the property, and either
closed the business or moved
elsewhere within the past 10 - 20
years? It is often a good idea to
track them down and ask them
why they closed-up or moved.
Who is doing the leasing
for the property?
Knowing who you are dealing
with will help you better prepare
for negotiations. Is this a
big leasing brokerage, a real
estate agent, an employee of
the premises owner or a family
member of the landlord?
You will want to approach these
tenants and ask them how their
lease negotiations went. If
the leasing agent claims he or
she has only recently acquired
the listing and does not know,
push for the details. Similarly,
a franchisor should have a
detailed history of the premises
and be able to provide all of
this information to you before
entering into any franchise
agreement, an agreement to
occupy the premises with the
franchisor, or a lease with a
landlord or real estate/leasing
agent.
Who were the last two
tenants to move out?
When and why did they move
out? Did they move across the
street or did they close?
As before, you will want to speak
to these former tenants, and
ask for more details about their
reason for leaving as well as
their opinions of the landlord,
property manager and the
property itself.
Who is the property’s
biggest tenant (the anchor
tenant)?
How secure is this anchor’s
tenancy? The anchor tenant(s)
typically attract the most traffic
to a property so you will want to
confirm they will be staying.
Tenants in a shopping centre
located near my home were
recently caught unaware when
Woolworths, the anchor tenant,
moved out. Despite having a
long-term lease,
Woolworths (or another large
grocery or department store
chain) can often move their
business but continue to pay
the rent, thus stopping any
competitor moving in.
What are the Terms of the
Lease?
Sounds obvious, but some
Real Estate agents must follow
a code of conduct; however, they
often can only share what the
landlord has told them. A lessthan-reputable landlord doing his
own
leasing may tell you anything to
get you to sign.
Who were the two most
recent tenants to move in
and when?
February 2016
ModernBusiness
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