Fashion retailers wise up to leasing practices
Findings in the one-off report - released earlier this month - showed fashion retailers were more susceptible to fluctuations in consumer spending than most other categories of retailer.
They also required high profile, high traffic premium retail space to capture impulse buyers, meaning they had to be savvy about playing the leasing game.
Jones Lang LaSalle corporate solutions director Damien Hawcroft said many employed external experts to assist them.
"Given that there is a lot of competition for premium space in the retail leasing market, fashion retailers are increasingly seeking to create leverage and flexibility in the lease negotiation phase through the services of tenant representatives," he said.
The majority of retailers were advised to secure a lease of five to seven years to ensure continued exposure to customers and to improve their leverage during lease negotiations to minimise net rental paid.
"Fashion retailers can create leverage in the lease negotiation phase by taking time to understand current and future market trends and to create viable options to improve their negotiation position", he said.
They needed to become adept at utilising strategies such as playing market cycles by timing the lease renewal strategy and negotiating review clauses to take advantage of market conditions.
Given the high level of competition for a scarce number of new sites and current market conditions, retailers were also recommended to secure a site with a longer term lease according to market conditions in each state.
"Market conditions will be best for re-negotiation of leases in 2008/09 in Canberra and Adelaide, whereas retailers looking to expand in Sydney and Melbourne are best advised to allow for lease renegotiations in 2009/10," Hawcroft said.
However, retailers also needed to balance the desire to secure sites with the need for flexibility to allow them to shield from or take advantage of changing consumer sentiment.
"Retailers should not be complacent, but act now. In today's market the lead time for site planning, acquisition and fitout is about 18 months."