It has been [tighter]. There’s a perception that things are tightening up a little bit, and that’s true, they are, but we still haven’t seen the same reductions in rent. We feel like landlords are recognising the situation is hard right now, but publicly listed landlords are just doing business as per usual and expecting there will be a high amount of churn with their tenancies.
They’re negotiating, yes. They’re talking.
In a negotiation like this, the bottom line comes in fairly quickly. And if you’re not willing to go to that bottom line, then that changes the nature of the discussion.
You’ve got your publicly listed companies like Westfield, and not so much Centro, but other ones, and they’re really looking at their per square metre rate. If you can’t reach that, then they’re just as happy to leave the site vacant for another few months.
Whereas in smaller properties, and with private landlords, they can’t really afford to leave their sites vacant.
There definitely isn’t an arrogance there, or at least there’s not anymore, in terms of how the leases are approached. Because you don’t have retailers climbing over each other with franchisees in tow, we’re finding that landlords are actually approaching us first.
What may happen with a normal leasing agent is that they’ll have 20 or 30 sites on the radar, and then negotiate with landlords on conditions. But if they don’t find a franchisee for those sites, there’s no legal obligation to move forward.
What we do instead is just focus on five to 10 sites, agree on general terms for those. However, we’ll have actively sought out franchisees and then we’ll come back and negotiate on that point. So we actually have a person involved in the business.
There has been a tightening of credit, too. We’re finding we’re able to tailor deals for the circumstances of our individual franchisees.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
