In the current retail environment—with sagging sales, shuttered stores and the occasional bankruptcy—cost-cutting has become a must. Retailers are employing all sorts of strategies to reduce expenditures, including reducing head count, cutting back on merchandise, looking for ways to cut operating costs and slimming down portfolios of stores.
Another area retailers should explore is examining existing leases to find if there are potential breaks that may have been triggered. Retailers should be aggressive managing leases, looking at things like rents, real estate taxes, property insurance, CAM charges, tenant improvement allowance reconciliation and other areas. Many retailers have lease administrators on staff that report to vice presidents of real estate. But there are also outside service providers that can aid in this task. Further, managing this information can be done more efficiently if leases are scanned digitally and made searchable.
Gravitas Real Estate Resources Inc. is one example of the sort of professionals merchants may want to turn to in auditing and managing leases. The firm provides electronic document management services in addition to helping companies audit and manage leases. Recently, Retail Traffic Editor-in-Chief David Bodamer sat down with Jeff Cohen, vice president of lease administration and auditing with the firm, to talk about what kinds of clauses retailers may want to keep an eye out for in the current climate and how they can take advantage of some of these clauses to get rent reductions or even possibly get freed from existing locations.