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Be Lease Savvy (3/3)

Popups and long term leases… a square peg and a round hole.

You’ve found the perfect spot to pop up, viewed the premises, met with landlord and as the almost final step you receive the lease agreement in your inbox. What a surprise when you open the lease because while you’re planning a popup that’s just a few weeks long, the lease is way longer – like 80 pages!

The primary reason is because the commercial and retail property rental markets have not kept up with the changing needs of retailers and companies wanting short-term letting options. In 9/10 cases when you are given a lease for a popup you will receive the landlord’s standard long term agreement with a few provisions struck out to cater for the shorter letting period.

Here is a brief list of non-exhaustive items, which are usually standard in lease agreements that should be dealt with in your popup lease to ensure you have no surprises:

  • Gross Rental Amount: Given that popups are usually tied to a strict budget, try to negotiate a gross rental amount to fit within your budget which includes the full range of lease costs and then ensure this is drafted into your popup lease. In other words, the gross rental amount should include all costs during the lease period including operating costs, parking, levies, estimated consumption charges (if possible), improvement district fees and all administration costs (if applicable). This way you can avoid surprise costs creeping up on you and landing outside of your budget.
  • Lease preparation fee: Fees charged for preparing a lease for a popup should not be entertained as these can add up to R2000 to your lease which is a significant cost if one is only popping up for less than a month and on a tight budget;
  • Security: A deposit should not be required for a popup lease of less than two months as the full rental amount should be paid upfront for such a short period. Other security like a surety should also not be required, on the same basis.
  • Obligations on termination: Ensure that you are (at most) only obligated to return the premises to the state it was in when you received it and that you are not required to return the premises to a better condition compared to when you took occupation. Take pictures on the date of occupation and forward them to the landlord/agent or keep them for your records and do the same on your last day of occupation.
  • Fixtures and fittings: Ensure that any custom design furnishings or modular furniture kits that are being installed in the premises will not become the property of the landlord upon termination. Whilst it does make sense for provisions of this nature to be included in long-term leases, if you are hosting several short-term popups you will want to ensure that you can move your custom design kit around with you from popup to popup.

These are but a few pointers to keep in mind when staring down that 80page lease agreement.

For more information, or our specialised assistance, feel free to contact the PopUp Shop Shop team.

Stay Lease Savvy!

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