Your renewal has arrived and there is no rush to sign it. Rent is often the largest fixed cost a shop carries, and lease renewal is the one moment each five years when that cost is genuinely negotiable. Most owners sign too early and too politely.
The first thing to know is your rent as a percentage of sales. Work it out on real figures, including outgoings, and compare it with what your category can sustain. If that number has drifted well past what the business can carry, the lease is not a cost problem. It is a viability problem, and it needs a different conversation.
The second thing to know is what the landlord loses if you leave. Vacancy is expensive. Fit-out incentives for a new tenant are expensive. A stable tenant who pays on time and trades in a category that draws foot traffic has more leverage than they usually realise. Centres do not volunteer this.
Then get specific about terms beyond the headline rent:
- Fixed annual increases. A 4% or 5% ratchet compounds brutally over a five year term.
- Outgoings. Ask for the breakdown and question anything that has jumped.
- Term and options. Length matters if you intend to sell the business later, because a buyer needs security of tenure.
- Permitted use. Narrow wording can block you from developing new categories.
- Refurbishment clauses. These can commit you to spending you have not budgeted for.
- Relocation and demolition clauses. Both can end your business early.
- Personal guarantees and bank guarantees. Understand exactly what you are pledging.
Timing helps. Start the conversation months before the deadline, not weeks. Put your position in writing, unemotionally, with your figures attached. Be prepared to say that the current rent does not work, and to mean it.
If you are in a shopping centre, expect the process to be slow and lopsided. That is normal. Patience and evidence beat frustration.
We help members through lease negotiations regularly, with actual comparative data behind the position rather than gut feel. If you have a renewal or a review coming and you are not sure what to ask for, email help@newsxpress.com.au before you respond to the landlord.
