Leasing in today’s franchising world

Sarah Stowe

With an increased cost of living has come a property boom in Australia, particularly in Sydney where the average price of a home pretty much exceeds a million dollars.

This makes it increasingly difficult for anyone to own their own property: be it a shop, a unit or a house. But despite all of the growth in costs franchise businesses still need to find a location, and there are many things that go into choosing the right spot.

Kristin Simondson from the LeaseWise Group says that it’s important to remember that each individual brand has its own requirements, and that a standardised approach will likely harm a niche business.

“Every member of our team has unique retail and/or commercial real estate experience, meaning that we understand not only the importance of good site selection from a legal and financial standpoint, but also from the franchisee’s point of view in two or three years’ time.

“Each site needs to be a viable business in the long term, whether it is a company store or franchised,” Simondson says.

Key shopping strips have taken beatings over the past five years – like Melbourne’s Bridge Road or Sydney’s Oxford Street – and it seems like For Lease signs are regular additions to the streetscape.

Is this a sign of a greater leasing demon or just an example of how important it is to choose the right location? Simondson believes it’s crucial to contact the right people to help you pinpoint the right location.

“Having the right contacts in leasing can really assist with forward planning on expiry profiles of shopping centres or retail strips, but even with the right contacts and a strong brand, most of the time the right site is all about timing.

“In the last 12 months I’ve found our ideal shopping centre sites have been easily acquired, with retail strips proving difficult to acquire a viable site (there’s a lot on the market, not much of it is very good).

“Because we are in the market on behalf of multiple clients nationally, we find that we are uniquely equipped with the knowledge and contacts needed to ensure quick provision of a short list of ideal sites,” Simondson says.

Researching shopping centres

For the shopping centre giants there’s a part to play in helping retailers secure the right locations for their business, which help contribute billions of dollars per year in turnover. General manager of retail leasing at Stockland Tony Tsekouras says that it’s important to remember that each shopping centre is different and requires unique research into location selection.

“Stockland owns and operates 41 shopping centres throughout Australia, providing retail space to more than 3,200 retail tenants who, in turn, generate turnover exceeding $6.3 billion per annum. Every one of our shopping centres is different – and vary from small neighbourhood centres to sub-regional and super-regional centres.

“Our development and retail leasing teams work very closely with retailers to ensure the retail mix in each centre caters to our local customers’ needs and aspirations, thereby doing everything possible to ensure our retailers will thrive and grow within the trade area,” Tsekouras says.

Factors such as customer demographics, traffic data and customer surveys help to shape and define the right locations for franchises. Tsekouras says it isn’t necessarily difficult, though, and if all the right steps are taken all parties are happy: vendor and occupant.

Finding a franchise location

“Finding the right retail location is not difficult; the secret behind the success of franchisors and major retail brands is leaving no stone unturned, and leaving nothing to chance. Stockland owns and operates a very stable portfolio of shopping centres across Australia and, in many instances, we’ve either developed these centres from the group up, or acquired and owned the centres for 20, 30 or 40 or more years.

“Our depth of experience, coupled with very granular data analytics, detailed information on local customer demographics and regular customer surveys gives us a very good understanding about the type of retail businesses that are likely to succeed in any given Stockland shopping centre,” Tsekouras says.

Despite standardised rising rent costs Tsekouras explains that there is a requirement to ensure there is a sustainable environment for small business and franchisees within the community. Essentially, it’s key to attract the right people and keep them around.

“We [Stockland] are very aware of the role we play in supporting small business entrepreneurs within our communities. We pride ourselves on our financial performance and ability to create sustainable, lasting business relationships with our retail tenants, and this is reflected in the average tenure of our tenants across Australia,” Tsekouras says.