Chapter 7Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
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Retail Locations
Shopping Centers
Tradeoff Between Locations
There are relative advantages and disadvantages to consider with each location.
Locating in a mall:
Department Stores
Specialty Apparel
Category Specialists
Grocery Stores
Drug Stores
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Percentage leases – lease based on a __ of sales.
Retailers also typically pay a ___________ ___ based on a percentage of their square footage of leased space.
Most malls use some form of percentage lease.
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Variations of Percentage Leases
Percentage lease with specified maximum - percentage of sales up to a maximum amount.
Percentage lease with specified minimum - retailer must pay a minimum rent no matter how low sales are.
Sliding scale - percentage of sales as rent decreases as sales go up.
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Fixed Rate Leases - used by community and neighborhood centers.
- Retailer pays a fixed amount per month over the life of the lease.
Graduated Lease - a variation of the fixed rate lease
- Rent increases by a fixed amount over a specified period of time.
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Limits the landlord from leasing to certain tenants.
Some tenants take up parking spaces and don’t bring in shoppers: bowling alley, skating rink, meeting hall, dentist, or real estate office.
Some tenants could harm the shopping center’s wholesome image: bars, pool halls, game parlors, off-track betting establishments, massage parlors and pornography retailers.
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selling competing merchandise
______ Clause
Allows the retailer to terminate its lease if sales don’t
reach a certain level after a specified number of years, or if a specific co-tenant in the center terminates its lease.
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Zoning determines how a particular site can be used.
Building codes determine the type of building, signs, size, type of parking lot, etc. that can be used
Signs
Restrictions on the use of signs can also impact a particular site’s desirability
Licensing Requirements