With Mike Greene buying 140 M Local stores, it seems retail acquisition is top of mind for many in grocery.
I have been adviser to B&M Bargains on all property matters for over a decade - including more than 400 store openings. So what is the best way to future proof your estates management?
First, an expansion programme will never work if only one store at a time is opened. Mastering the art of juggling numerous transactions at various stages at the same time is key.
Second, once stores are acquired, the lease is key and flexibility should be front of mind. It’s vital to nail down or eliminate costs in the lease earlier rather than later when landlords have the upper hand. This will ensure the tenant has adequate rights and full flexibility to operate stores with minimal requirements for landlord involvement.
There is no need to reinvent the wheel for each acquisition as standard amendments can be developed. However, it is important that every single new lease is read carefully. Some are tenant-friendly, others not. Key clauses to look out for include ‘user’, which ensures the retailer has a way out and covers not only what they want to do now but also what they may want if they have to sell the lease. ‘Alterations and signage’ are essential for retailers, particularly a national operator with corporate style and colours. Tenants want minimal landlord interference and don’t want to have to seek approval for every change.
The ‘repair’ clause is crucial and will prove costly if they take on a full repairing obligation when the property is in a poor state to begin with - and retailers will not want to assume liability for any inherent defects.
‘Rights’ clauses need to cover trolley bays and storage containers and the display of goods outside a store or aircon, while ‘service charge/insurance’ costs need to be competitive and not inflated with unnecessary items or tiers of management costs.
As retail embraces the challenges of the internet and click & collect it will be more crucial than ever that they provide retailers with as much flexibility as possible.
Joanne Fearnley is commercial property partner at Gordons
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