This franchisee was located in the original Food Court of a major regional shopping centre which had expanded and created a second Food Court. Even though the landlord was offering a reduced gross annual rent of $160,000, that still represented a 20% occupancy cost (down from circa 30% at it’s existing rent of $220,000).

However, because of the Food Court duplication, the franchisee’s annual sales had fallen from over $1,000,000 to about $770,000 with further falls expected over the term of the new 5-year lease.

The tenant’s solicitor requested a GEM Lease Analytics™ evaluation to see what a reasonable rent for this shop should be. The analysis did not support a new lease at higher than $110,000 gross annual rent. As a result, the business owner decided to vacate the premises, which remained vacant for more than 2 years.