How landlords (big and small) are like dogs 🐶

Let’s talk about landlords.

Often when we start considering retail spaces, Pedal Retailers express some version of this concern about large, corporate landlords: won’t they try to take advantage of us as a small business?

The image in their minds is that corporate landlords are like this:

While individual or mom-and-pop landlords are like this:

But having worked on more deals than any human should, we know that in many cases, the big corporate landlords can actually be like this:

And that mom-and-pop landlords can also be like this:

It makes total sense for small retailers (especially those navigating brick-and-mortar for the first time) to assume that corporate landlords are (1) going to try to squeeze you financially, and (2) not going to care about you.

The truth is that landlords of all shapes and sizes can be great, awful, and everything in between.

Ultimately, there are two core issues that define a “good” landlord:

1. 📄 The Lease Deal: Will I get a lease deal that allows my business (and me) to thrive?

2. 💕Attention and Care: Will my landlord give me and my brick-and-mortar space the attention we require?

Let’s break these down a little and consider the realities that face all landlords:

The Lease Deal:

Landlords… they’re just like us

Just like your business plan that sets the parameters for what you can afford in rent or spend on your initial build-out, all landlords/property owners will have financial requirements for their property and any leases.

Corporate landlords and individuals alike may have a mortgage on the building, so their financial flexibility depends on their own debt obligations. Even if there is no mortgage, the deal still “needs to pencil,” as we say in the biz. Let’s say you’re looking at a building that’s been owned by the same family since 1956 and the mortgage is long paid – the current owners likely depend (literally or even emotionally) on the rental income from the building.

Running your brick-and-mortar may be a labor of love, but it’s a business venture for you – it’s the same story with your landlord. Owning commercial real estate is their business, and as much as they may love (or be totally indifferent to) their tenants, the numbers have to work for them.

Mo’ money, mo’... flexibility

While your deal with a corporate landlord is part of an overall plot for world domination financial portfolio, these landlords typically have much deeper pockets, or at least more financial tools at their disposal, than mom-and-pop landlords. This can mean bigger TI packages, more rent abatement, and overall more financial flexibility. The deal still needs to make financial sense for the landlord at the end of the day, but landlords with bigger portfolios may be able to get more creative in ways that benefit you. Lots of new retailers assume that they’re going to get worse deals from big corporate landlords, but that’s not always true.

Attention and Care:

The “long lease” fallacy

All landlords need to protect the value of their properties, so they will all care about what you do inside and outside your space, both in terms of physical changes and how you operate your business.

Corporate landlords may include more specific, explicit requirements in the lease document which may feel onerous at first (#extra), but we’ve seen our fair share of mom-and-pop landlords who get all up in your beeswax whether the lease allows them to or not. Just because a lease is more detailed doesn’t mean the landlord is going to be proportionately more difficult – it just means that there’s more clarity as to who is responsible for what.

“I’ve got a guy”

If you’ve got a leak coming from the ceiling above your stockroom, you need that fixed pronto. Corporate landlords typically have professional property management companies whose job it is to maintain and manage the building. On the flip side, we’ve seen many individual landlords insist on using “their guy” to make important repairs or being frustratingly hard to reach, slow to respond or cheap, making tenants feel incredibly frustrated.

In one of my old cafes where our landlord was a major multinational corporation, the on-site engineering team was so helpful we used to call them basically whenever anything broke. They were handy, helpful, and great at diagnosing all sorts of maintenance problems – even if it wasn’t their problem to solve. Not all professional management companies are created equal, and sometimes the landlord’s “guy” can be a real gem – every situation is a little bit different.

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So while it’s tempting to assume that big corporate landlords are out to prey on the little guy, and that family-owned real estate is going to be more friendly to local businesses, every situation is different. If you find yourself choosing between a great space owned by a publicly traded company and a great space owned by an individual, don’t base your decision off your vibes about the landlord. Instead, go back to your business plan to figure out which space suits your business better.

If both spaces seem about equal in terms of their location and layout, then it’s time to consider each from the perspective of “good landlord” characteristics - how generous of a deal can you negotiate, and how much TLC do they give their other retail tenants?

And, don’t forget – the most successful landlords aren’t the ones who squeeze their tenants the hardest, they’re the ones with successful tenants – the tenants who pay the rent, stay for the whole term of their lease, and bring traffic and value to their properties. Landlords win when their tenants do too – regardless of whether they're Great Danes or Yorkies.