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With your leasing agent in tow, get ready to negotiate and make a decision. Most tenants sign three-, fi ve-, or seven-year leases. From 2008 to 2012, the economy went from deep recession to just beginning to stabilize. "You had a lot of people that went in during the Great Recession and got a reduction in rent, but didn't change the option rent," says David Spargo of real-estate advisory fi rm Huntley, Mullaney, Spargo & Sullivan. "So now they are realizing that the option rents are signifi cantly higher than what they are paying, and that is taking a bigger bite of their costs." Now, you must: • Be ready to move quickly, due to competition for space. • Start early—at least six months ahead, and up to a year—to gain leverage in negotiations. There can be long lead times for site improvements and permitting. • Have fi nancial statements and/ or your business plan ready. Landlords will ask for it. • Look at foot traffi c before you start negotiating your rent. • Try to include rent relief or options to relocate within a retail center, to protect yourself from any negative effects if key tenants move out. • Know your leverage points. These could be strong credit, a killer concept, or the ability to move quickly to close the deal. • Know your limits. Fully develop your concept and your growth potential so you know what you can afford. So the next question is: When will retail rents stall, or fall? The answer could be "soon," in the most highly priced mar- kets. Landlords in some desirable New York neighborhoods are cutting asking prices according to brokers there. Excluding parts of Manhattan that never have vacancies—Fifth Ave- nue, Columbus Circle, the Flatiron District—supply may be exceeding demand. Soho is dotted with vacancies—nearly 100 in August 2015—and that's just one small patch of the island. Some believe rumblings of a rise in interest rates has European retailers pulling out of New York. Richard Kave, a managing director at Lee & Associates NYC, said on www.commercialobserver.com that asking rents have been rising at a fast clip over the last couple of years. Rent reductions, too, at least in some areas, are a result of land- lords overreaching at the outset. "If I own a building and I see that rents in Times Square are approaching $2,000 a foot, my thoughts might be, 'Let me push the rents up,'" says Kave. He adds, "Some of the asking rents are … just not justifi ed by the volume retailers can do." "There has to be an adjustment in the rents because I think it's fi nally catching up," says Alexander Hill, the founder and managing principal of AHA Real Estate Group. "Tenants are going to start to be behind on the rent." Of course, if rents are too high, properties sit empty and existing tenants may struggle to pay their rent. Chicago is apparently be- coming a tenants' market. Sharon Kahan, fi rst vice president of CB Richard Ellis, a Chicago-based retail-specialty brokerage, observes that "there's quite a lot of space on the market and probably more still coming." My advice? Get yourself a broker and see if you can stay in your lease. Or go ahead and look for a location where the economics may work better. ILLUSTRATION BY JACK POLLOCK Continued from page 108 110 barista magazine