I am coming up to my 23rd year of business in the same location and my landlord wants to renew my lease. I am smack dab in the corner of a busy shopping center, and get people that live in the city (55k population) everyday tell me they never knew I was here (because of the corner). I don't want to move because it's a pain, but I am paying the most per square foot because of how long I've been in the center. What are my options?

I'd survey commercial space that provides more signage, provide comps of other commercial space if it is cheaper, or request better signage. From what it sounds like, advertising and location are the most important items to you.

Find an experienced real estate lawyer in your area. Even better, find one who does a lot of work with leases. LA must be lousy with them.

That person can give you advice about rents, options, and make sure your lease does what you need it to do.

You could contact a commercial realtor to run the comps for you.
Then with that info approach your landlord and see if you can renegotiate you terms.

As a landlord myself I would think they might look favorably on a tenant with such a long track record as you apparently have, particularly if the length of your lease is several years.

Negotiation is all about information. Those with more complete information tend to get better results.

The first thing I would do would be to get in touch with a commercial real estate broker that specializes in retail spaces and have him or her show you what's available on the market.

You need to arm yourself with your BATNA (best alternative to a negotiated agreement), and know what another suitable location would cost you. Arm yourself with costs for moving, including transferring security and utilities. Get demographic data to see how it might affect your sales numbers.

Once this is all done, you can then begin negotiating with your current landord--if you leave, his dollar per square foot drops, his store may be vacant for some time, and he risks taking on a less stable business.

You might even find that a new location is ultimately better for you, and that no amount of negotiation makes it worth it.

Agree that using a broker will be the ticket.

I've seen your space, it is well and truly tucked as far away as possible in the center. Even looking for it the first time not an easily found storefront. It's a testimony to your service and staff that you've built such a successful business in that spot.

I'd take advantage of that awareness and customer loyalty and consider a move to more visible space on this go round. I suspect your current customers will follow you anywhere in a 5 mile radius without blinking an eye, and unless another jeweler moves in that space (unlikely) an infrequent customer who walks up and finds you gone will still hunt you down even if they don't follow you on FB or Sigforum.

The move shouldn't affect your current revenue, should give a platform from which to build more, and will have you on the other end of the equation of being courted by a person looking to fill a spot.

Only complicating factor is security and safe(s) which is not an inconsequential cost in your case. If you can get someone to help offset that and roll parts into long term lease that may take away some of that sting too.

Good luck!

You need to find a "tenant rep" type of real estate broker. I have some friends in the business out here who have sister offices in So Cal. If I can be of help, let me know.

Thank you everyone for chiming in. Funny thing is when I opened 23 years ago the center was managed by a family, now the center is managed by a HUGE company. The land they are leasing from is owned by my clients LOL.

Agree that a commercial broker is also a great source of information. They will try to push you to something they get more commission on, but you can be aware of that.

quote:

Originally posted by davetruong:
... but I am paying the most per square foot because of how long I've been in the center...

I don't understand this statement. I understand that a lease may have an option for an extension at a set price (including an increase). But, you are not obligated to exercise that option at that price. You are always free to move, or to renegotiate.

The only way your statement makes sense to me is if you've been extending your lease by exercising options with built in price increases, and over time those have outpaced the market. If you are paying more than a new tenant would pay, then certainly you should be able to reduce your rent to what the new tenant would pay. After all, if you move, the best they can do is get what a new tenant would pay.

Having said that, as a retailer, I can attest to how sensitive your business can be to your location. You can move down the street, and would think that your customers would follow you, but there is no guarantee. On the other hand, if you do move, you have an opportunity for a big "moving sale", and a big "grand opening sale". And of course you can do direct mail/email your customer base to inform them of the move.

Get a broker. You need to understand the market. What are rents, TI, other concessions? Do you have leverage, or does the landlord? ie if you walk, how easily can he find a tenant? it costs landlords money to lose a tenant. vacancy, marketing, building improvements, etc. You might be able to re-negotiate your deal. Or a broker can advise where you business should be, and you can analyze the cost impact. Maybe there is a space that is offers better visibility.

A broker will help with all of this. And they get paid by the landlord if you get into a new lease. It shouldn't cost you anything.

You need a commerical broker that represents tenants. Someone that does this everyday and is an expert in leasing. These retails leases can be quite complex. You are a pro in your business, but you need a pro for this transaction. As mention above, the nifty part is that your landlord is going to foot the bill for your broker.