Featuring Summit Salon Leasing Consultant, Lynn Chisholm
Lynn Chisholm has dedicated the past thirty years to the commercial real estate industry. She is an authority in lease negotiation, with experience ranging from national, regional, and small, independent clients. In the professional beauty industry, reducing overhead costs is critical. As a leasing consultant with Summit Salon Business Center, Lynn walks through the process step by step with salon owners. Read on to learn Lynn’s tips for smart salon renewal leasing strategy.
A key question to ask yourself eighteen to twenty-four months before your lease expires is, “Do I want to remain in this location?”
If the answer is yes, and you do not have a renewal clause, here is Lynn’s advice: “Without time and negotiation, you will be signing off on the highest rate the landlord offers you. Worst case scenario, you risk losing your space if the landlord chooses not to renew your lease. You may then be scrambling to find a new location. If your lease has already expired and the landlord even allows you to stay until you can move into a new location, they may charge you double the rent until you leave.”
If the answer is yes and you have a renewal clause, follow the tips below.
Lynn’s Top 3 Tips for Salon Lease Strategy:
- Know the expiration date of your lease and the terms of your renewal option. Start negotiating with the landlord well ahead of the date by which you must exercise your option. If you exercise your option (or worse, do not exercise your option) without talking to or meeting with the landlord, I can almost guarantee you will not have any negotiating power.
- Stay Ahead of the Game. Do not feel pressured to exercise your renewal option early, but do start researching and negotiating as soon as possible. Negotiations are all about having the upper hand. When landlords know that you only have one month to make a deal or you will lose your space, you run the risk of putting yourself in a desperate situation and not getting the best rate possible. Also, keep in mind that when you exercise your renewal option you are committing to the existing terms of the lease and have no negotiating power.
- Know your market! Call the landlords who have similar locations, new developments in the area, and buildings with vacancies and see what the rates are for Base Rent, Operating Costs/Taxes, Leasehold Allowance, etc. When you know the rates of the buildings in your area you will know immediately whether you have a good rental rate or not and will be able to tell the landlord that other rents in the area are much lower.”
Lease negotiations are a vital part of a salon business. When in doubt, consider working with a leasing consultant. Here are a few of the benefits:
- A consultant reviews all existing documentation (signed and unsigned, as not everything in the negotiation makes its way to the document).
- A consultant will request information on your current situation and determine what is most important to you.
- A consultant will provide an analysis of the deal you have (whether existing or new deal not yet signed).
- A consultant will provide recommendations on how to improve the deal.
- If the landlord is agreeable, a consultant will make changes directly to landlord’s document so you can forward all changes to the landlord for their review or select the ones you want to request prior to sending it to landlord.
- A consultant will work with the salon owner on negotiation strategies, focusing in on the items that are most important to them and coach them through the negotiation.