EAST LONGMEADOW, Mass., July 13, 2016 — Many retail CFOs are seeing that occupancy costs as a % of sales have grown significantly in the last few years and are seen as a major obstacle to achieving the profitability targets CEOs desire. According to Paul Kinney, executive director of the National Retail Tenants Association (NRTA), in an environment of weakened in-store sales and occupancy costs as a % of sales, it’s a critical time to adopt a clear lease audit strategy.

He explains that retail CFOs who have stores coming up for renewal will find it pays to get as much leverage for upcoming negotiations as possible.

Landlords typically pursue rent increases and relocations of underperforming stores to secondary locations–but if a store is underperforming, chances are the center is underperforming. Once a retailer audits the center it can either exercise existing lease terms, or use audit findings to negotiate more favorable terms. Additionally, an effective audit strategy helps to check a landlord who may be pushing harder for allocating expenses to make up for shortfalls in base rent at the tenant’s expense.

Kinney encourages CFOs to audit all stores after the first full year of opening. It’s great to audit a store after it has been open for five years and discover a substantial claim–that is, it’s great for the landlord. They settle the claim for some discounted value and they’ve used your money for five years. By auditing a store after its first full year of operating, your recoveries may not be as dramatic, but landlords are on notice that you’re watching them.

NRTA hosts the Expanding Knowledge conference, which attracts about 500 commercial and retail real estate lease professionals concerned with controlling occupancy costs.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/national-retail-tenants-association-alerts-retail-cfos-of-the-power-of-auditing-real-estate-leases-300298176.html


Categories: OAG News

Kirk Morgan

Kirk has enjoyed 14 years in the recovery audit industry starting with Loder Drew, PRG and CBIZ since the late 90’s and has been with OAG doing sales for almost 2 years. He has a history of successful sales to Fortune 100 clients including GE, Tyco, Glaxo Smith Kline, CBS, Sony and Qwest. Throughout the late 1980’s and into the 90’s, he worked his way up to National Sales Manager for MP Plastics, a manufacturer of plastic products for the Americas and Europe. Clients included all the mass merchants and grocery trade, but with the advent of cheap Asian imports, much of that industry disappeared in the US. He’s currently working on originating new business for OAG, improving the sales and marketing materials, presentations, brochures and other collateral and supporting the sales efforts of any OAG associate who needs backup. Kirk attended San Diego State on a partial scholarship and a full time job and earned a BS in business and a BA in Journalism, and then worked for SDSU in Europe for two years leading tours. He lives in Laguna Beach, CA with his wonderful wife Landi.