😟 Fear not the 10 year lease term

A decade feels like an eternity until it's over.

When you live inside the commercial real estate bubble, a ten year lease term doesn’t seem like a big deal — like a long weekend on the Cape (since that’s obviously where you’re going if you work in CRE.) But to many new retailers, the thought of committing to a lease for TEN WHOLE YEARS feels more like being sentenced to the federal pen for a white collar crime.

If that new retailer sounds like you, here are some things to keep in mind:

+ Your lease locks down the rules for the entire term.The longer your lease, the longer you have to operate your business on your own terms since you’ll have negotiated the rent and other important financial and operational details for all ten years in your initial lease agreement.

+ Growing a business takes time. A LONG TIME. On opening day, your business is like an infant — hungry all the time, keeping you up at night, and pooping itself pretty regularly. But in ten years, that infant has become a fourth grader — doing all sorts of math with fractions and decimals and helping out with laundry. The first ten years are when your business will do the most growing up, so the security of solid lease is crucial.

+ It takes a lot of cash up front to get your business open. Whether your startup capital budget requires five or seven decimal places, it’s going to take time to recoup that initial investment and actually start to make money. Your business plan’s financial projections should help you determine how many years it’ll take to make back that investment, so you want to be sure your lease provides enough time.

When you’re moving and grooving in your retail space the years tick by, and the last thing you want to think about is having to either (a) negotiate three or five more years with your landlord and hope that she doesn’t want to raise your rent beyond what you can afford, or (b) find a new place of business, moving all your stuff, and getting all your customers to start going somewhere new — no thank you. Ten years maybe isn’t so bad after all.