In this case, GEM Lease Analytics™ calculated that a reasonable rent for this shop was around $280,000. In the process, the GEM™ analysis verified that the gross rent of $270,000 p/a, set by a Determining Valuer at the Market Review 5 years before (bringing the rent down from $450,000 p/a), had also been a reasonable rent, based on its algorithms, even though GEM™ was not used at that time. With an escalation clause, the $270,000 p/a had grown in 5 years to around $285,000, close to what the new GEM™ analysis recommended.

The consistency of these two results proved important in negotiations between the tenant and landlord. Firstly, it gave both parties the confidence to agree to starting the new 5-year option at a gross rent of $285,000 p/a. Secondly, when the tenant asked for more 5-year options, the landlord felt comfortable granting the request. In addition, because of the extended tenure on his lease, the IGA owner invested a further $1 million into his business, which improved the offering and presentation of the store and increased the appeal of the landlord’s property.

Interestingly, at the first Market Review, a Nationally branded Valuer used by the landlord supported a gross rent of $420,000 p/a. However, when the tenant’s Valuer properly analysed and applied the landlord’s Valuer’s evidence, along with other evidence he collected, the dispute ended with the rent being set at $270,000 p/a.