Parking Pitfalls for Independent Retail Tenants

by Jeff Grandfield and Dale Willerton – The Lease Coach

ParkingDo you have enough parking spaces for your customers, you and your staff? It’s a common problem The Lease Coach sees with both new and established businesses. We’ve discussed the problems with parking in our new book, Negotiating Commercial Leases & Renewals FOR DUMMIES in greater detail but here are a number of factors for retailers to consider.

First and foremost, what is the availability of parking spaces for your customers? Does it appear that there are there enough stalls for all to use? Where are these parking spaces – in front of, behind or at the side of the building? Stalls located beside or behind the building may not be immediately visible. Are the spaces “rush parking” (first-come, first-served) or assigned specifically for your business’ use? These “designated” parking spots are desirable and discourage others from taking your space(s). If your business is located near a major grocery store, consider that the best available parking spots may be taken by food shoppers. Parking spaces located close to your business door will be advantageous for elderly customers who do not wish to, or cannot, walk too far.

For many commercial tenants, parking is free. But for some, monthly parking charges for staff vehicles can range from $85/month to several hundreds of dollars per month. Even if you are prepared to pay for parking, don’t assume it will be available. Consider the cost of parking for your customers as well. If your customers remain at your business for some time, this cost can increase dramatically and they may not be able to simply run outside and put more money in a parking meter.

In our experience of working for commercial tenants, here are a number of real-life situations for you to remember. We recall visiting a couple of entrepreneurs who had hired us to do a new lease in a property they had found and liked. When we arrived at the property, it was around 10:00 a.m. and the parking lot was already packed with other cars. We pointed this out and questioned just how busy this same lot would be after the vacant units were occupied with more tenants. With hearing this advice, these two entrepreneurs wisely decided it would not be in their best interests to pursue this leasing opportunity. We also well remember a couple of tenants who had been working from the same property for almost 18 years and hired us to negotiate their lease renewal. These two tenants were very frustrated that their landlord had converted the property’s free lot into paid parking – this, of course, would greatly inconvenience these tenant’s visiting customers. Our message here is to never assume that your parking situation will always remain the same.

Our final words of advice for retailers are to always assume that the only parking rights you will have are the rights you get in writing in your lease agreement. Also, remember that it’s best if your customers can park in the best stalls while your staff can park elsewhere. Determine whether the landlord has a designated area for staff to park and whether there’s a parking policy that the property manager polices or regulates. Smart landlords require both tenants and staff to provide their vehicle license plate numbers to the property manager for this very purpose. If the landlord or real estate agent tells you that all parking is first come, first serve, you may want to include a clause in the lease agreement stating that if, in the future, the landlord gives special parking rights or privileges to other tenants that they will have to give those same privileges to you. Parking is often used as an incentive by a landlord trying to attract new tenants, and landlords have been known to unfairly divvy up the parking to suit themselves or to attract other tenants.