Future-Proof Your Lease: Expert Insights from Phillip Chapman

Bean There, Done That!

Founder of Lease1 Phillip Chapman joins Phil to discuss the current landscape of the lease market and provide valuable insights and advice for business owners. They emphasise the importance of being proactive in lease negotiations and understanding the terms of the lease. Philip also highlights the need for retailers to right-size their stores and manage their occupancy cost ratio. He encourages business owners to seek support and guidance from professionals like Lease1 to ensure they are getting the best value out of their lease agreements.

Summary 💡

0:02:23 | Current landscape in the lease market post-COVID
0:03:15 | Importance of proactive lease negotiations
0:04:36 | Trend of smaller footprint in cafes
0:05:19 | Importance of getting the right size store
0:06:06 | Changes in lease negotiations over the past 20 years
0:06:46 | Importance of being proactive about leases
0:07:44 | Benefits of proactive approach as a tenant
0:08:02 | Common mistakes in lease agreements, particularly missing lease options
[0:08:27] | Importance of being proactive and having a critical path or gantt chart for your lease
[0:09:17] | Occupancy cost ratio as a measure of success
[0:10:30] | Engaging Lease1 at any point in the lease cycle
[0:12:11] | Timing aspects of leases and approaching the landlord proactively
[0:13:06] | Managing outgoings and questioning increases
[0:15:21] | Free lease review offered by Lease1
[0:16:16] | Importance of lease terms for cafes
0:16:42 | Lease terms shifting from longer to shorter due to risk.
0:17:02 | Flexibility in lease terms, such as 3 plus 2 plus 3 plus 2.
0:18:00 | Importance of ring-fencing assets and directors in leases.
0:18:45 | Be proactive, seek support, and connect with resources.
0:19:13 | Recommended lease term: three years with three-year option.
0:19:51 | Pending lease review and need for national minimum lease standards.
0:21:28 | Advice for cafes in financial distress: communicate and seek help.
0:22:26 | Reach out for support, join the community, and take action.
0:23:14 | Importance of being proactive and not doing nothing.
0:24:56 | Shift in focus from CBD to suburbs in cafe growth strategy.
0:24:56 | CBD cafes in Melbourne, Sydney, and Brisbane were too heavy in CBDs.
0:25:08 | Regional cafes were more profitable due to cheaper rents and higher coffee prices.
0:25:27 | COVID-19 accelerated existing trends, including the decline of CBDs.
0:26:03 | Limited hours and changing dynamics make planning difficult for CBD businesses.
0:26:26 | CBD cafes should focus on building assets and be well-prepared for risk.
0:27:10 | CBDs may become lifestyle centres with vertical living and more traffic flow.
0:27:42 | Work from home has negatively impacted CBD businesses.
0:28:05 | Turnover rent is a smart option for new CBD restaurants.
0:29:00 | Three tips for signing a lease: review the lease, surround yourself with good advisors, and consider the future of the lease.
0:31:39 | Leasing should fit into your lifestyle in terms of health, wealth, and time.
[0:33:10] | Coffee Commune leasing bootcamp
[0:33:41] | Lease1 helps people accelerate their potential

Episode Highlights 🌟

The Current Landscape of the Lease Market
In the post-COVID era, the lease market has undergone significant changes. Landlords and fund managers are focused on recapturing asset value and revaluing leases to find rental growth. Phillip emphasizes the importance of being proactive in lease negotiations and leveraging time to secure the best terms for your business.

Trends in Commercial Leases
One of the key trends in the lease market is the shift towards smaller footprints for businesses. Phillip advises businesses to carefully consider the size of their premises to optimise their occupancy cost ratio and avoid unnecessary expenses.

The Changing Dynamics of Lease Negotiations
Phillip emphasises the importance of reading and understanding your lease, as well as being proactive in managing it. Lease1 offers a free lease review service to help businesses assess their lease agreements and identify potential areas for improvement.

Mistakes to Avoid in Lease Negotiations
Phillip highlights the importance of being aware of lease events and taking proactive steps to secure favourable terms.

Managing Occupancy Costs and Outgoings
Phillip provides valuable insights into managing occupancy costs and outgoings. He advises businesses to focus on their occupancy cost ratio, which is the percentage of gross rent to sales.

Navigating CBD vs. Suburbs
The COVID-19 pandemic has accelerated the shift away from CBD locations. Phillip advises businesses to carefully consider the viability of CBD leases, as the dynamics have changed significantly.

Key Takeaways 🔑

1. Be proactive in lease negotiations and understand the terms of your lease.
2. Right-size your store to match your business needs and reduce costs.
3. Manage your occupancy cost ratio to ensure profitability.
4. Review your lease regularly and seek professional advice to leverage time and secure your business's future.

Connect With Us 💌
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Have questions or topics you'd like us to cover? Reach out to us at https://www.coffeecommune.com.au/contact/. Enjoy this episode and as always, thanks for listening.

- Lease1 website: https://www.lease1.au/

- Bean There, Done That! Podcast: https://www.coffeecommune.com.au/the-new-bean-there-done-that-podcast/

- Contact The Coffee Commune: https://www.coffeecommune.com.au/contact/

🎧 Produced by The Podcast Boss

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