Author Archives: PineProperty

Wellbeing in the Workplace

As we navigate our way through the ‘new normal’ of COVID19 realities, the pandemic has created a wave of uncertainty in the workplace.

Will my business survive? Will I still have a job? Do I have to take a pay cut? How long will I work from home? Will we ever go back to what we knew as a normal workplace?

This can take a toll on an individual’s mental health. Now is not the time to lose sight of your human side or your company’s values.

Supporting the wellbeing of employees in the workplace has been on the rise for years but COVID has taken this to a new level. Employers know that organisations perform better when their staff are healthy, motivated and focused.

When employees feel recognised and supported, they have a higher wellbeing level and thus perform better. This benefits the bottom line. It’s a simple win/win.

Question: What does ‘wellbeing’ mean to you and your team?

There will be varied responses but, whatever the answer, make a point of creating a company culture that puts employees’ wellbeing and mental health on a pedestal.

Here are some of our suggestions on maintaining workplace wellbeing at the moment:

Provide transparent communication. Given there is so much uncertainty and the COVID crisis is constantly changing, it’s important for business leaders to provide staff with transparency and positive reassurance in real time. Strong communication is critical during uncertain times.
Encourage open communication. 1 to 1 meetings will encourage employees to share concerns about themselves, their colleagues and their families. It’s integral to ensure leaders are able to answer questions about the business and employee’s individual circumstances.
Praise and recognise. Encourage a culture where appreciation of day-to-day efforts are shared and celebrated. Always celebrate the wins – big and small.
Implement flexible schedules for employees. Providing more flexible working hours, virtual check-ins, a variety of spaces to work from and the right tech support will reduce stress for employees, especially when they are concerned for the wellbeing of those they care for.
Adopt health initiatives. Keeping your staff moving benefits physical health and helps reduce stress levels. Initiate ride to work days, walking meetings, lunch time surf breaks, zoom yoga classes, ergonomic workstations including stand up desks, healthy snack or meal supplies or simply taking 10 minutes to get outside for fresh air and some sunshine.
Offer external support. Sending regular reminders to staff with information and resources they can access is important. This may be financial advice or mental health support.

Most of all, as a leader or manager, be a good role model for self care strategies. Self care and wellness in the workplace starts at the top. Walk the walk. Employees are unlikely to prioritise their wellbeing and mental health if a leader is fostering a ‘burnout’ environment.

If you need someone talk to, call:

Lifeline on 13 11 14
MensLine Australia on 1300 789 978
Beyond Blue on 1300 22 46 36
Headspace on 1800 650 890

How to face and deal with setbacks

Setbacks are an inevitable part of life, however research shows us that the way we respond to a setback has a huge impact on how quickly we overcome it.

Whether you’re facing a business or investment that isn’t performing as expected, you missed out on a promotion or job, or a relationship didn’t work out, how you react is crucial.

This also applies to smaller setbacks that are becoming more common due to the increasing pace of society and digital communications including social media, SMS and online dating.

In fact setbacks activate the same regions of the brain as physical pain, according to widely accepted and published research. To make matters worse, social pain lasts longer as we are more easily able to relive and re-experience it than we are physical pain.

However, this has formed a critical role in our evolutionary past. If we were evicted from our tribe it probably meant death, so those who were attuned to that were more likely to correct their behaviour and remain in the tribe.

While this logic remains true today, in the modern world this model may undermine your ability to thrive. To help, we have outlined some clinically proven strategies for dealing with and overcoming setbacks.

Get back on the horse:

This may seem clichéd however a setback can lead to a vicious cycle as you seek to avoid the situation that lead to the pain of the initial setback.

Whether you faced a setback applying for a new job, going on a date or starting a business, it can cause us to withdraw and stick to what is safe. However “playing it safe” can serve to exacerbate social isolation, loneliness and feelings of failure, and further contribute to feelings of failure.

Be aware of your emotions:

Your ability to identify, distinguish and describe your emotions – known as emotional differentiation – has been proven to help you better deal with them, according to a 2015 research review.

“People with greater emotion-differentiation skills appear to show greater [calmness and composure] when confronted with the pain of rejection,” the study authors say.

There are a number of other mental health benefits associated with strong skills in emotional differentiation and the good news is it can be practiced and learned.

See the opportunity:

It is important to view a setback as an opportunity rather than a failure because it will lead us to new things.

Relationship research by Stanford University has found that people who view a breakup as an opportunity to grow and improve will recover far more quickly than those who view it as revealing an unchangeable defect in themselves.

What’s more, the “fixed view” personality will continue to be haunted by the relationship breakdown for years to come, while the “growth-oriented view” is likely to move on much more quickly.

Reflect, Reboot Reject:

Prominent humanist and researcher, Elaine Dundon, reviewed the common traits of those who deal with a setback and identified three common steps:

Reflect on why the setback happened: Was it you. Your idea. Communication. Timing. Resource or money issue? Or a global pandemic?
Reboot and start again by trying a different approach. “The mistake many people make is that they use the same approach over and over again, the one that has just failed,” Dundon says in her Ted Talk (below).
Reject that the setback is a failure. If there is no foreseeable way to make your idea work and anything you say or do will not change the outcome, then it is time to move on. Do not see it as a failure. Do not beat yourself up. Take what you have learned and use it to improve.

Other important strategies for dealing with rejection include:

Practice self-compassion. Be kind to yourself and limit negative self-talk
Maintain pespective and look at the positives
Get enough sleep and exercise
Eat well and avoid drugs and alcohol
Practice meditation and mindfulness

“An arrow can only be shot by pulling it backward. So when life is dragging you back with difficulties, it means that it’s going to launch you into something great. So just focus, and keep aiming.”

COVID-19 commercial rent relief obligations for landlords and tenants: a detailed analysis.

The government has announced that landlords will be required to offer COVID-19-affected small businesses rent relief, while tenants must continue to honour their lease agreement.

The “Mandatory Code of Conduct” was announced by Prime Minister Scott Morrison and will be overseen by a “binding mediation process”.

The Code is applicable where the tenant has an annual turnover of less than $50 million – whether retail, commercial or industrial – and is suffering financial stress due to COVID-19.

The definition of “financial stress” is the same as for the JobKeeper Payment, being a loss (or projected loss) in Australian business revenue relative to a corresponding period in 2019.

Eligibility for Rent Relief Policy:

“Landlords will be required to reduce rent proportionate to the trading reduction in the tenant’s business, through a combination of waivers of rent and deferrals of rent,” Morrison said.

Waivers of rent must account for at least 50 per cent of the reduction in business while deferrals (delayed payments) must be amortised over the balance of the lease term and for a period of no less than 24 months, whichever is the greater.

“The landlord must not terminate the lease or draw on a tenant security. Likewise tenants must honour the lease.”

“This preserves the lease, it preserves the relationship, it keeps the tenant in the property,” the Prime Minister said, adding that it is designed to spread the financial burden while still allowing tenants and landlords to negotiate.

Eligible businesses must continue engaging employees through the JobKeeper initiative where eligible and provide rent relief to their subtenants where applicable.

Less affected businesses are expected to honour their existing lease terms and rental agreements.

Work it out:
A key message in Scott Morrison’s press conference when announcing the Code, is that tenants and landlords must come together to “work it out”. A summary of the Code’s key points are outlined below:

Landlords must offer tenants proportionate reductions in rent payable, in the form of waivers and deferrals, based on the reduction in the tenant’s trade.
Interim agreements should account for revenue, expenses, profitability and a reasonable recovery period.
Rent waivers must constitute no less than 50 per cent of the total reduction in business (see examples on page 7 of the Code) and should be more if required, however regard must also be had for the landlord’s financial ability to provide such additional waivers.
Deferrals must be amortised over the balance of the lease term or a period of no less than 24 months, whichever is the greater. No fees or punitive interest may be charged on deferrals.
Repayment of the deferred rent should not compromise the ability of the tenant to recover from the crisis.
Landlords must not draw on a tenant’s security for the non-payment of rent during the COVID-19 pandemic and a reasonable recovery period.
All leases must be dealt with on a case-by-case basis, considering financial hardship due to COVID-19, along with lease structure and expiration dates.
Tenants should be provided with an opportunity to extend their lease on existing lease terms for an equivalent period of the rent waiver and/or deferral period.
Landlords should not increase rent (except for retail leases based on turnover rent) for the duration of the COVID-19 pandemic and a reasonable recovery period.
Landlords cannot apply any prohibition or levy any penalties if tenants reduce opening hours or cease to trade due to the COVID-19 pandemic.
The landlord must not seek to permanently mitigate the risk of default in negotiating temporary arrangements.
Any reduction in statutory charges such as land tax, council rates or insurance must be proportionally passed onto the tenant.
Landlords and tenants are required to assist each other in their respective dealings with other stakeholders including governments, utility companies, and financial institutions
All premises and commercial arrangements are different so it is not possible to form a collective industry position.

For more details, read the Code in full or click to watch Scott Morrison’s press conference below. He begins talking about commercial property just after the seven minute mark.

Banks required to support landlords:
In his press conference Scott Morrison again stated that he expects Australian and foreign financial institutions to support landlords and tenants with appropriate flexibility as they work to implement the mandatory Code.

COVID 19 – Pine Property Tenant Retention Services:
Pine Property can be engaged to assist landlords and tenants in negotiating appropriate rent relief terms and mutually beneficial outcomes.

“The new Code requires landlords and tenants to work together and negotiate an interim binding agreement,” Mr Kelleher said.

“This will require empathy and understanding from both parties and a willingness to find common ground.”

Benefits include:

Provide both parties with security of tenure.
No impact on current lease status protecting lessor positions and capital value.
Ensure the lessee has assurance and clarity around agreed relief positions and structure.
Creates an interim binding agreement on both parties providing certainty during this period
of immense uncertainty.

If you are a tenant or landlord and interested in learning more in our tenant / property retention services, please contact us.

What are the best negotiation tools, tips and strategies?

Negotiation is part of everything we do in life and mastering the art of negotiation will see you build stronger relationships and better outcomes for all parties involved.

Whether it is in negotiating a commercial property contract or encouraging your teenager to do their homework, or infant to complete toilet and teeth before bed, the following negotiation strategies will help you get a positive result.

Make MESOs:

According to a 2019 series of studies, making Multiple Equivalent Simultaneous Offers (MESOs) – where someone presents multiple offers of equal value but different composition – is proven to improve negotiation outcomes.

The MESO strategy serves to help you better understand your negotiating partner and their interests, expectations and perspective.

In the studies, MESO recipients perceived the multiple offers to be a more sincere attempt at reaching an agreement. They also lead to positive joint outcomes and a more co-operative negotiation climate.

Be prepared:

A lack of preparation is one of the most common mistakes made in negotiations, causing people to leave value on the table or be taken advantage of, according to Harvard Law School.

Their 27-point negotiation preparation checklist outline a comprehensive strategy to preparing for a negotiation, including knowing what you want to get out of negotiations and the point at which you are prepared to walk away.

Ensure both parties win:

Harvard Law School also states that if both parties are satisfied with the outcome of a negotiation, then it is more likely those parties will develop a positive ongoing relationship.

They even recommend confirming with your counterpart that they are happy with the agreed terms after that agreement has been reached, described as a “post settlement-settlement”.

While this may cause more pain up front, the trust it will instil is more likely to build a solid foundation for future negotiations.

Be Genuine, Honest and Mature:

A negotiation is not an argument and should not be treated as one. If someone in the negotiation begins to be rude, argumentative or immature, it is easy for the entire negotiation to follow suit, leading negotiators to escalate commitment to their chosen positions which more often than not dissolves any benchmarks reached, stalling the negotiation and eroding the foundation upon which the negotiation is based. .

Ensure you take the high road and remain calm, respectful and genuine. People are more likely to view a course of action as less risky, and therefore more acceptable, if it is suggested by someone they trust.

Retaining integrity is critical. People know when others are being disingenuous or manipulative and negotiations will likely break down. This also applies to applying (or succumbing to) excessive pressure to agree on certain terms, which is likely to do more harm than good.

Provide a warm drink and a soft chair:

If you are meeting in person to negotiate, provide your counterpart(s) with a warm drink and a soft chair before negotiations begin. A study published in the Journal of Science found that participants who briefly held a cup of hot (versus iced) coffee had more trust and were warmer people and softer negotiators.

And in another study, those sitting in a soft chair were also found to be softer negotiators, with a hard chair leading to “increased rigidity in negotiations”.

Ensure no one is hungry:

2019 research conducted at Cornell University and discussed by Harvard Law School found that being hungry lead people to having a “greater sense of entitlement than those who had just eaten”.

Being hungry leads people to focus on their own immediate needs at the cost of others and could lead to their behaving unethically and selfishly.

So next time you are sitting down to negotiate, ensure all parties begin the negotiation with a full stomach and consider catering the negotiation to ensure everyone keeps hunger at bay.

COVID 19 – Pine Property Tenant Retention Services:

Due to the current COVID 19 coronavirus situation, Pine Property is seeing an increase in tenants seeking softer lease terms (Rent Relief) to accommodate for the challenging national / global economic environment.

This is a challenging time for both landlords and tenants and it is important for all parties to have some clarity going forward, however a complete lease re-negotiation is not recommended, nor feasible and not beneficial for either the lessee or the landlord.

Pine Property can be engaged to assist Landlords in negotiating appropriate relief terms, incapsulated in an interim binding agreement, providing mutually beneficial outcomes for both parties:

Benefits of which include:

Provide both parties with security of tenure.
No impact on current lease status protecting Lessor positions and capital value.
Ensure the lessee has assurance and clarity around agreed relief positions and structure.
Creates an interim binding agreement on both parties providing certainty during this period of immense uncertainty.

If you are a tenant or landlord and interested in learning more in our tenant / property retention services, please contact us.

What does a tenant rep do?

A tenant representative is a commercial property specialist who acts on behalf of businesses or individuals looking for a property to rent or buy.

Like a residential property buyer’s agent, a tenant rep will seek to understand a buyer or lessee’s commercial property requirements and work to find a suitable site and negotiate terms of the sale or lease agreement.

The benefit of using a tenant rep to source a commercial property is that a good one will have deep insights into the property market in which you wish to trade or invest and can provide invaluable advice on the trading history of a property, helping you understand whether it may be suitable for your business.

A good tenant rep will also know what constitutes a good price, ensuring you don’t pay more than you should. They will know what a specific property – and surrounding properties – last sold or leased for and whether nearby businesses are trading well.

This knowledge means a tenant rep will be aware of potential off-market opportunities. In fact, the Managing Director of Manly-based Stenton Retail Property Services, Robert Hartman said nearly all of their 200-plus 2019 transactions were off market.

“We spend about 80 per cent of our time doing research so we make sure we know what the comparable rents are and which shops are not trading well.”

“Then, when we get a new client, we do a portfolio review and talk to property agents and the heads of leasing at all the major centres and tell them what we are looking for.”

Once a suitable property is found, they begin negotiations.

“We focus on de-risking the deal and push heavily on getting capital or fit-out contributions. We also employ techniques like capped rent so you can’t have a rent that is more than say 12 per cent of your turnover,” Hartman said, adding that they usually will negotiate on three suitable properties to secure a deal.

Choosing a Tenant Rep: Retail, Commercial or Industrial

While there may be some crossover, a tenant rep will generally specialise in either retail, commercial or industrial property, according to Hartman.

His business specialises in retail, where he said there are currently good opportunities.

“Right now the market is in the favour of the tenant. Businesses have been bedding down their online presence which has lowered demand a little.”

This market shift has seen an increasing number of service-based businesses entering traditional retail properties, a trend Hartman has seen in strip shops like Manly Corso and the big shopping centres.

However the location is critical and he cautions that not all tenant reps will have retail knowledge, contacts or experience to determine what is a suitable location.

“A lot of them don’t have the data or relationships with landlords and property agents. If a tenant rep doesn’t know what the comparable rents are in the area, or which businesses might be in trouble, then be cautious about engaging them,” he said.

How much does a tenant rep cost?

Hartman said some tenant reps will charge one to two months of the first year’s rent as a fee, while others will charge a monthly retainer and then work on a smaller success fee.

He describes the latter as being better for the client as there is less rush to do a deal, meaning the tenant rep will take their time to find the right property with more attractive financials.

“It can take six to 12 months to do a deal, but this is not something you want to rush.”

If you are a retail, commercial or industrial tenant or landlord looking for advice, please feel free to reach out to Pine Property or Stenton Retail Property Services.

Pine Property Manly Christmas Gift & Experience Guide

Another year has come and gone and as we prepare to welcome 2020 we face the ever-daunting task of finding Christmas presents for friends and family.

At Pine Property, we are big fans of giving or receiving experiences. We’re also big supporters of local businesses and community, so we have compiled a list of local stores offering great Christmas gifts and awesome experiences.

If you’re looking to find that perfect present, check out below.

Experiences:

Manly Surf School:

The perfect gift for the budding surfer. Manly Surf School runs classes every day catering for all levels of ability and fitness. Group and private lessons available for kids and adults, starting at $70.

P: +612 9932 7000

A: 93/95 N Steyne, Manly Beach

Manly Spirts Distillery Tour:

Gift a tour of the Brookvale based distillery specialising in gin, vodka and whisky. Your giftee will learn about craft distillation and artisan spirits. $25 per person including tasting flight.

P: +612 8018 5144

A: 4a/9-13 Winbourne Rd, Brookvale NSW 2100

Tinkertank Learn To Code:

Programmers and developers have a strong career prospects and Tinkertank is the perfect place to plant the seed of a future in computers.

P: 1300 670 104

A: 1/29 Rialto Ln, Manly NSW 2095

Manly Surf n Slide Unlimited Sliding Pass:

For the kids, a day at the waterslides is one of pure joy. And the best thing is that you can sit harbourside in the sun while they wear themselves out.

P: +612 9949 6645

A: Commonwealth Parade, Manly NSW 2095 –

Q Station Ghost Tours

If you know someone who likes a bit of a thrill then a ghost tour of Sydney’s Quarantine Station – one of Australia’s most haunted sites – is sure to spook.

P: +612 9466 1500

A: 1 North Head Scenic Dr, Manly NSW 2095 – Ghost Tour

Experiences:

Thrills and spills aren’t for everyone and some people might want to give something that can be unwrapped on the day, so we have shortlisted a great bunch of gift ideas below.

Budgy Smuggler

A great Christmas gift for those who like to make a statement. Budgy Smuggler is one of Manly’s most iconic brands and quickly becoming an Australian legend.

P: +61 452 428 349

A: 1A/22 Darley Road Manly

The Artisan Cheese Room

With a huge range of cheese hampers, cheese boards, knives and other gifts, this is cheese-lover’s paradise.

P: +61 448 801 905

A: 40 E Esplanade, Manly

Winona Wine

This bottle shops supports small producers and specialises in natural, organic and sustainable wine, craft beer, sake and artisanal spirits.

P: +612 9977 3460

A: Shop 9, 2-14 Pittwater Road, Manly

We Can See

With a beautiful range of artisanal-inspired homewares and apparel you’re sure to find the perfect gift.

P: +612 8095 8899

A: 195 Pittwater Road Manly

Manly Longboards

A great range of tees, tanks, tops, caps, accessories and stickers for those who like a little more foam under their feet.

P: +61 9977 0093

A: 42 Sydney Road Manly

Wild Forager

There are gifts galore in this gorgeous shop full of flowers, plants, pots, furniture, eco-friendly wellness products, jewellery and much more.

P: +612 8041 9712

A: 4/22-26 Albert St, Freshwater

Ian Donald Optometrist

A great range of designer sunglasses and prescription glasses from a long-standing Manly local.

P: +612 9977 6700

A: Shop 2 39/37 The Corso, Manly NSW 2095

With Love From Manly

This popular giftware store in the heart of Manly offers every opportunity to stack up presents under the tree.

P: +612 9977 7977

A: 47 Sydney Road, Manly

Bertie

If you’re shopping fashion for a trendy lady, then look no further. You can even grab a Campos coffee while you browse.

P: +61 403 590 121

A: 1/53-57 Pittwater Rd, Manly

Assembly Label

With stores in all of Australia’s trendiest locations, Manly has not missed out and you need not travel far for a great range of his and hers fashion and gift ideas.

P: +612 9976 5710

A: 79 – 81 Pittwater Rd, Manly

Summer pop-up stores and short term leasing an opportunity for landlords and tenants

The Budgy Smuggler store in Manly

If your commercial property is without a tenant at the start of summer then you should consider the prospect of marketing it to potential short term tenants as a pop-up store.

Pop-up stores are attractive to emerging businesses and large corporations alike, with summer seeing a surge in enquiry numbers from businesses keen to test the market or deliver a premium experiential offering.

This is especially so in Manly and the Northern Beaches where swelling summer visitor numbers are an attractive prospect for brands.

A short term lease or pop-up tenant can also be operational within weeks, compared to a long-term tenant who might take months to occupy the premises, according to Pine Property’s Patrick Kelleher.

“If a long term tenant is not secured and undertaking a fit-out by the start of December, it is unlikely they will be in before February or March at best, so you should consider short-term leasing or pop-ups,” Mr Kelleher said.

“Pop ups are popular with local brands because it enables them to dip their toe in the market and ascertain the local appetite for their product before they commit to a long-term lease,” he said, adding that landlords also benefit by generating an income while searching for a long term tenant.

Budgy Smuggler’s pop-up success story

One Manly brand that began its bricks and mortar presence with a pop-up store was Australian swimwear icon, Budgy Smuggler.

Having traded online for over a decade they tested bricks and mortar with successful pop-up store in Manly over the 2015 October long weekend.

It was a success and they followed it up with a three-month pop-up store from November 2016 to January 2017 near Manly Wharf, which also traded well.

Budgy Smuggler General Manager, Brenden Hartmann said the sole intention of the pop-ups were to test the appetite of the market before entering into a long term lease.

“After we closed at the end of January, we still had people turning up and calling to ask where our shop had gone. This was the sign that we had enough traction to open a permanent store in Manly,” Mr Hartmann said.

They have since also trialled a summer pop-up store in Brisbane and will be opening one in Melbourne in 2019.

Today Budgy Smuggler operates a permanent shop from Darley Rd in Manly, a location secured by Pine Property.

“It’s a little tricky in Manly to find the right space. As a small business, we couldn’t afford to be directly on The Corso but we wanted to be close enough that people could take a slight detour to find us. In the end, it wasn’t too difficult,” Mr Hartmann said.

He recommended that brands who are considering a pop-up store be strategic around what they stock.

“You don’t need to stock everything, which we’ve tried to do in the past. Just bring the best sellers and a handful of the rest.”

The “retail experience” boom

The pressures felt from online has seen premium brands adapt with small format retail pop-up stores designed to deliver an experiential offering in smaller footprints.

Increasingly, small format pop-up stores focus less on sales and more on providing a personalised shopping experience, collecting customer data and reinforcing brand messaging.

“It enables a large retailer to have a presence in a high street location and drive consumer engagement and online sales,” Mr Kelleher said.

2017 research from the UK found that a retail revolution is taking place with an increasing focus on delivering a high quality “retail experience” through environment, education, escapism and entertainment.

Due diligence still required

While pop-ups are a great short-term commercial leasing solution for landlords, Mr Kelleher emphasised the importance of vetting any potential pop-up operator, especially when they are an emerging business.

“You must have the right operator who knows what they are doing. You can run into problems if they are misusing the property,” he said.

“You still need to ensure the entity is qualified, has insurance and is willing to pay an appropriate bond.”

The rise of service industries in the retail property market

The old Ribs and Rumps location was turned into commercial office space with beachfront views after the iconic restaurant closed in 2017.

A change in the consumer landscape has led to a paradigm shift in retail property that has enticed landlords to broaden their leasing prospects from traditional goods retailers to service retailers.

While food, beverage, clothing and homeware businesses once dominated high street spaces, in the past few years, commercial offices and health and wellbeing providers, such as gyms, physios and yoga studios, have become a common sight.

Although underlying demand is still present, landlords in the Manly retail space may need to rethink their current tenancy strategy, particularly if they have a property that has struggled in recent years – namely first floor retail space.

The changing consumer landscape:

The advent of e-commerce has had a significant effect on goods retailers, with many struggling to maintain brick-and-mortar stores in the face of more people browsing and ordering online.

However, although the boom may have slowed the expansion of physical stores, 63 per cent of Australians still prefer in-store shopping experiences—albeit, perhaps for a different reason.

The trend we are currently seeing is towards service-orientated businesses as consumers favour personal, hands-on and immersive shopping experiences.

Having a clear point of difference that makes shopping memorable and enjoyable, whether through delivery, fulfilment, community or other factors, sets certain retailers apart.

Web-rooming and show-rooming have also risen in popularity as consumers either research a product online but purchase it in a physical shop, or vice versa. In both scenarios, the hands-on experience in-store is a key part of the purchase pathway.

Additionally, consumers are seeking out the convenience of all their goods and services in the one location, drawing many health and wellbeing retailers to high street locations, such as shopping strips and centres, that they previously didn’t occupy.

The impact on commercial real estate:

In the wake of this development, many goods retailers have struggled to stay afloat, even in strong markets like Manly.

The response of many successful businesses has been to downsize, focusing instead on providing the best user experience through aesthetic retail design, rather than stockpiling large quantities of goods in-store.

Restaurants have also moved away from excess space, with demand for huge square meterage to accommodate large groups shrinking as delivery services have increased in popularity.

Some retailers have even gone so far as to move all their transactions online, foregoing face-to-face sales entirely as one commercial kitchen we know of in Brookvale has done.

For landlords in the Manly market, this means thinking outside the box when it comes to leasing their property and targeting different types of retailers, including commercial offices and allied health providers.

This can require a significant change in perspective and expectations. Manly has had a good run for a long period, and while there is definitely still underlying demand, I find that many landlords are out of touch with the current market.

For spaces which are a bit challenging, whether because of shape, frontage, location, size or unusual features, landlords should aim to attract service industries as opposed to focusing solely on goods retailers.

Where one type of business has struggled, another type may flourish and provide an opportunity to future-proof the property and maximise revenue.

First-floor properties and commercial offices:

We have seen this strategy succeed numerous times in first-floor properties, where the limited street and foot traffic exposure is a factor.

Placing “softer uses” such as commercial offices in these spaces, instead of traditional retailers, tends to lead to a better yield and improved longevity.

Additionally, there are less hoops to jump through when placing a new tenant and reduced turnover costs as a fit-out often only requires new carpet and paint.

Demand is also high: I receive approximately 20 commercial office enquiries for first-floor spaces for every one restaurant enquiry.

The success of this type of move can be seen in the old Ribs and Rumps property on South Steyne, which has now been converted into commercial offices with beachfront views after the restaurant closed in 2017.

Ground-floor properties and health providers:

Ground-floor spaces, with their higher rent, are generally less appropriate for commercial offices, who often don’t need the increased exposure.

However, landlords looking at alternative retailers for their properties would do well to consider health and wellbeing operations.

While you may have to accept a slightly lower rent in some instances, businesses will often stay longer, allowing landlords to maximise their revenue.

The bottom line:

Manly is still a tight commercial market, with low vacancy rates and a quick turnaround on properties.

However, there has been a paradigm shift in recent years and savvy landlords will be quick to take advantage of it by targeting different types of retail operations.

Options for breaking a commercial property lease

Entering into a commercial or retail lease agreement is a commitment that should not be taken lightly, however there are options to break a lease if you wish to upsize, downsize, cease trading or sell your business.

A variety of factors will determine the cost of breaking a commercial lease, including the terms of the lease agreement, if it has a break clause, and how long before the lease end date. It is recommended that a commercial property specialist/solicitor is engaged to review the lease terms and provide tailored advice.

Generally, the lessee (tenant) will be required to pay rent until a suitable replacement is found as well as any shortfall between what they were paying and what any new tenant pays, for the remainder of the lease. Any rent increases agreed to in the original lease must also be accounted for.

The lessee is also generally responsible for the costs of finding a replacement tenant including legal fees, real estate agent commissions and advertising costs. They may also be liable for the costs of returning the property to the condition in which they took it.

Often, lessees will engage a commercial real estate agent to find a replacement tenant on behalf of the landlord. In any case, the various lease transfer methods must be understood. There are three main commercial lease exit options, Assignment, Sublease and Surrender.

Lease Assignment:

When a lease is assigned, the rights and obligations of a lease agreement are legally passed to another entity.

This is the preferred method for tenants wishing to break a commercial lease as once the lease is assigned they will no longer have any liability.

However the landlord’s permission to assign the lease must be sought and they will usually have input on the quality of any new prospective tenant.

If the landlord deems the new tenant to be a higher risk then they may require the original lessee’s personal or bank guarantee remains in place for security purposes.

Where the terms, conditions, financial guarantees and risk associated with a new tenant remain comparable to the existing tenant, the landlord will likely accept a complete assignment of the lease and its obligations, and the original lessee is absolved of any further responsibility.

Sublease:

A sublease occurs when a lessee rents out part of a commercial or retail property to another tenant.

The original lessee remains liable to the landlord for fulfilling the obligations of the head lease including rent, outgoings and property damage, while any personal or bank guarantees will remain in force.

The landlord’s consent is required to sublease a property, however lease agreements usually stipulate that consent cannot be unreasonably withheld.

While it may be possible to sublease an entire property, an assignment is usually the preferred method in that instance.

When negotiating a sublease with a new tenant, it is important to ensure relevant terms such as the length of the lease, any options to renew, and make-good clauses are consistent with the head lease.

Surrender:

Surrendering a lease means negotiating with the landlord to let you exit the lease entirely and take back the property.

It is a formal process and will provide a quick exit, however an exit fee (surrender amount) will likely be payable. The amount will vary largely depending on market conditions and the remaining term of the lease.

If the market is buoyant and the landlord feels it will be easy to find another tenant for the property then the surrender amount will likely be far less than in a deflated market.

And if you have an extended period left on your lease, the fee will likely be far higher than if you are nearing its end.

For further information on breaking a commercial or retail property lease, please contact us for a confidential discussion.

Five years of Pine Property, rewarding reflections and exciting visions

Pine Property turns five this month. It’s a huge achievement and one that we’re extremely proud of.

Five years is a major milestone for any business, especially when you consider the high failure rate of small businesses, often cited as between 60-70 per cent in the first five years.

As a young agent with CBRE, I always had it in the back of my mind to start my own agency. I was constantly thinking about how I could do things differently if I was calling the shots.

However, I never imagined Pine Property would grow so quickly into the successful sales, leasing, and property management business it is today.

Looking back, we have helped hundreds of businesses – often global enterprises – secure new locations in and around Manly and the greater Northern Beaches.

Many of these businesses have also achieved phenomenal success. And so, in celebrating our fifth birthday, we reflect on our beginnings, the journey and what it takes to run a small business.

Hard Work:

When I first started Pine Property, my wife was pregnant with our second of four children. I knew it was going to get busy, but it’s not until you’re in the thick of it that you realise just how busy.

In the early days especially, you must be prepared to roll up your sleeves and acknowledge you are not above any task. Opportunities do not wait.

You can also never clock off. You are always thinking about the business. Even if you are not physically at work there is always something to action or someone to respond to.

This improves as you scale and systemise processes with staff and software, however it never really stops. You will always live and breathe your business. However, you will also learn to accept that you cannot be everywhere at once, or everything to everyone.

Knowledge and Network

Your network is an extension of your business and it’s imperative that everyone you work with and recommend share the same business values as you.

When I started Pine Property all I had was a phone and my network of contacts and I am eternally grateful to those clients and suppliers who backed our capability and had a genuine interest in supporting the business.

My competitors have also become some of my tightest allies, even mentors. I worked for many years both with and against other agents and I’ve always had the attitude that its far better to partner with a like-minded agent than not.

However be prepared that not everyone will play by the same moral compass as you and some people may try to take advantage of your size and firepower. Over time you learn who has aligning business values and who not to invest your time with.

Building a brand and culture is incredibly rewarding:

When running a business you need look beyond the deal because there are so many other components of running a successful business that are critical to success. And often they are the most rewarding.

While the bottom line is critical, culture underpins everything. As the Pine Property team has grown over the years, seeing their personal growth is a massive part of that reward.

The real estate industry can have a reputation for being cut-throat with a “win at all costs” motto, however I take great pride in Pine Property’s inclusive culture where more emphasis is placed on team success than individual success.

Celebrate

The truth is that we should celebrate every small business – past and present – because running one takes skill, knowledge, commitment, patience and a strong network.

In the five years since Pine Property was launched we have built a strong sales, leasing, and property management business based on relationships and results. But I have no intention of hitting cruise control. We are only just getting started.