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Retailing For Developers

Owners & Tenants Must Hang Together

As long as there have been tenants and shopping centers developers, there has been controversy, usually involving the responsibilities of the two parties within the terms of the contract, and what each party is supposed to get.

As in most business dealing, there have always been some problems between developers and tenants. But there have also been a great many solutions, which are the groundwork for more sophisticated, and mutually satisfying dealings in the developer / tenant partnership.

A whole new generation of people involved in the shopping center industry is uniting in an attempt to streamline this partnership, making negotiations easier and working more positively toward the success of a center. Both developers and tenants must work together toward this goal. There are a few ways everyone can contribute to making success a little easier.

There's not a successful person in this industry that has a minute to spare. So a developer or a tenant should approach the person with whom he'd like to do business with the same courtesy he'd expect of someone who approached him. He should have all the facts at hand. Developers should bring prospective tenants all the information they need to make an informed decision, including complete site plans, ten ant lists, renderings, area maps and demographic breakdowns.

Tenants should be able to provide developers with an accurate guideline of their requirements for site selection. If each has a full understanding of what he has to offer and what needed to make a deal, both will be able to avoid wasting time on deals that don't suite them. What's more when they do find what they are looking for, they will probably be able to start negotiations on a higher level, thereby coming to terms more easily and in less time.

Whichever side of the lease someone is on, at some point, they are bound to be faced with a great deal offered by someone they don't know much about. Getting the information is easy. First, decide on an objective set of questions that will provide important answers. Then set out to interview those who have had past dealings with the prospective landlord or tenant. Developers, ask our landlords, ask other landlords to confirm a prospect's credit, his contribution to the merchants association and the overall good of the center. Also, find out if the retailer contributes to his own success through self promotion, advertising, a schedule of timely and innovated sales, good turnover of merchandise and a well kept and well managed store. If possible, visit one or more of the retailer's locations for an objective view yourself.

Tenants, look at other tenants within the prospective centers the developer owns or manages. Other tenants can give a good indication of whether the landlord delivers what he promises, and how the developing company deals with special problems that arise. Find out who you will be dealing with on a day to day basis for problems and see if that arrangement has been successful before.

We all know there are hundreds of obstacles that come between the purchase of a piece of land and the opening of a shopping center. If everyone could be a lot more realistic about the length of time it takes to jump those hurdles; there will be fewer angry phone calls and a lot more happy people in the industry. Everyone, developers and retailers alike need to allow timtable contingencies and provide each other with more accurate opening dates. It may not be easy, but it's better than ending without a tenant or a shopping center with the budget planned on one.

Everyone should also be realistic about costs. Tenants should not approach developers with ridiculous rents and expect to be taken seriously. Most of the time developers have researched the market and are priced competitively.

Even if developers sell a center, they must uphold their integrity, by selling the center to a company concerned with future success. Integrity cannot be written into any lease, but it is an integral part of any partnership.

William Steiner is co-founder of DRYCLEAN USA in Miami, Fla.
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