Retail Lease Norms &amp; Best Practices
I am looking to discuss some common practices in retail leasing. I recently started working for a fitness concept as a real estate coordinator and despite having a masters in real estate, I have some questions.

My predecessor was having franchisees sign 10 year leases and I suspect it was because he did not have the experience to recommend otherwise. So my first question is, what is the norm for lease terms? Can I honestly get more leverage on terms if I go from a 5 to a 10 year lease.

And to piggy back off this, with 3% annual bumps, a 10 yr gets pretty pricey in the last 5 years. In your experience, were rents 10 years ago similar to increasing by 3% a year? I imagine the great recession halted that growth...

What is the common term for a guarantee? While we are a national brand each of our locations is privately owned and operated.

When calculating total rent, does TIA and brokerage commissions get amortized over the term of the lease and added to the base rent? Or is that already considered in the quoted rent PSF?

Talk to me about termination rights! I understand a broker wants his 10 yr commission a whole hell of a lot more than a 5 yr, and he can say there is a termination clause; but i still don't feel like I am giving my franchisees the best deal possible. 

Thanks for the time and consideration. If you have time and feel like talking drop me a PM, it would be greatly appreciated. Especially from someone who may work for corporate retail real estate at a national level.
[{"id": "d5qi1hb", "text": "Here are some of my answers as someone who works for an owner of retail shopping centers, though I am on the acquisitions/asset management side and do not do leasing.  We have several fitness concepts as well.  (Coincidentally I also have a masters in real estate.)\n\n&gt; So my first question is, what is the norm for lease terms? Can I honestly get more leverage on terms if I go from a 5 to a 10 year lease?\n\nI'm not entirely sure about your concept but if it's a larger format use, we would typically ask for 10 years for new deals.  Fitness uses are generally destination oriented so it acts as an anchor, plus some fitness uses (e.g. 24 Hour Fitness) tend to require a lot of buildout and landlord work so we would want to reap the benefit of all of that by locking the tenant in for 10 years.\n\nWe don't have too many of the smaller format uses (e.g. yoga studios, Orange Theory, Soul Cycle) so I'm not sure what the norm is there, though generally in retail, smaller and less cost intensive tenants can get away with shorter lease terms.\n\n&gt; In your experience, were rents 10 years ago similar to increasing by 3% a year?\n\nIf we are looking at 10 year deals, rents typically would be flat in the first 5 years and then would take a big step in year 6, and stay flat for the last 5 years.  Rent increases could range between 10% to 15% depending on negotiations.  I hardly ever see 10 year deals with 3% annual increases, at least at our properties.\n\n&gt; What is the common term for a guarantee? While we are a national brand each of our locations is privately owned and operated.\n\nDoes this mean you guys franchise out and each location is owned separately?  If so, the answer ultimately depends on each owner.  Their net worth/liquidity and experience running similar concepts all factor in here.\n\n&gt; When calculating total rent, does TIA and brokerage commissions get amortized over the term of the lease and added to the base rent? Or is that already considered in the quoted rent PSF?\n\nIf there is a specific clause in the lease that amortizes TIs back to the tenant, then that would be the case.  Otherwise, it is already considered in the quoted rent PSF.\n\n&gt; Talk to me about termination rights! I understand a broker wants his 10 yr commission a whole hell of a lot more than a 5 yr, and he can say there is a termination clause; but i still don't feel like I am giving my franchisees the best deal possible. \n\nTerm right for whom?  As owners we almost never give term rights to a tenant but we often have them as landlord.  Based on your question I'm assuming it's a term right for the tenant.  I don't really see what the issue is there since commissions are paid by the owner anyway, unless there are some conditions that must occur for tenant to exercise that right.\n\nHopefully this is helpful.  If anyone else out there more versed in this, feel free to correct any of the above.", "replies": [{"id": "d5tjeec", "text": "Thank you for the thoughtful comments, it was greatly appreciated!", "replies": [], "depth": 2}], "depth": 1}]