Wi14 Education: Your Landlord, Your Business Partner

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Four booksellers served on a panel at the American Booksellers Association’s 2019 Winter Institute to discuss how indie bookstore owners can build a relationship with their landlord, including best practices for improving landlord relationships, tips for turning a landlord into an advocate for local small businesses, and tips for lease negotiations. 

The January 23 panel “Your Landlord, Your Business Partner” was moderated by Annie Philbrick of Bank Square Books in Mystic, Connecticut, and Savoy Bookshop & Café in Westerly, Rhode Island. The panelists were Scott Abel of Solid State Books in Washington, D.C.; Jill Hendrix of Fiction Addiction in Greenville, South Carolina; and Michael Tucker of Books Inc. in San Francisco, California. ABA member booksellers can visit the Education Resources page to see a complete video of the session (booksellers will need to log in to BookWeb.org; e-mail [email protected] for login credentials).

Tucker emphasized the importance of booksellers building not just a business relationship with their landlords, but a personal one as well. “This has worked for us in situations where the landlord may be selling the building, or maybe the company who is leasing the building is changing hands. You’re going to be the last person to know unless you have some kind of personal relationship with these folks,” he said. “For me, it’s never a business meeting. I’ll see him for lunch or I’ll see him for dinner two or three times a year, never to talk business. You end up knowing what the kids like, what he likes to read, what she likes to read, and I always get him some gift cards or calendars at Christmas time.”

This has worked in Tucker’s favor in other instances as well, for example in 2009, during the recession. Due to the lack of business, Tucker said he knew he was going to have to ask the landlords of each of the store’s locations for rent relief. Because he had worked to build a relationship with them, most agreed.

“[The landlords] have come to really appreciate what the bookstore is for them,” Tucker said. “They have their identity tied up with the bookstore. They’re very proud to be a part of it.”

Hendrix said she also has a strong relationship with her landlord, who shops with her store during the holiday season and spends time getting to know her. She said that the benefit of having a good relationship with her landlord outweighs any negative aspects of the space her store is currently in, which include the fact that it’s slightly too large of a space and that it affects her bottom line. When an owner has a good relationship with their landlord, they don’t have to be “worried everything is going to turn into a legal battle between lawyers,” Hendrix said.

According to Abel, one of the key aspects to developing this relationship is communication. “It really comes down to understanding the location and the landlord as an entity,” he said. “You really have to spend the time and manage [that relationship] almost as much as anything else.”

When disaster strikes, the panelists agreed that open communication is crucial to effective crisis management. “It’s important that you’re able to find out what they consider their responsibility, and you can do that if you have a speaking relationship with somebody,” Tucker said; booksellers will get a better response that way, rather than if they didn’t know who to call.

“I would recommend trying to understand how they would prefer to operate,” Abel added, noting that some landlords might prefer to fix the air conditioning unit themselves because they installed it.

Hendrix said that while it’s important for booksellers to educate themselves on how landlords would prefer to handle issues that may arise, it’s also important to tell landlords about the particular needs of an independent bookstore. The best time to do that, Hendrix said, is during the lease process.

“You need to know what your business can and can’t cover. You need to be honest with yourself first, and then also be honest with the landlord,” Hendrix added. “Tell them your story and make them see it from your perspective, because they have a different business and different concerns. They’re used to dealing with corporate chains and big pockets. You have to educate them about indies and our small pockets.”

Both Philbrick and Tucker shared their experiences with implementing a percentage-based rent agreement. For Savoy Bookshop, the Town of Westerly renovated the building because it wanted a bookstore. Philbrick used ABACUS reports to show what the occupancy percentage was, and the resulting agreement is that the store pays a percentage of the previous month’s sales for rent and utilities. In San Francisco, Tucker added, rent is so expensive that at two locations he has established percentage-based rent.

Having a relationship with her landlord has helped Philbrick when her store did not earn as much as expected in sales. The first year, as part of the agreement, Philbrick said they didn’t pay any rent. “It was supposed to go up every year, and I just told them I don’t want to do that,” she said. “I just don’t feel comfortable, and first quarter in New England is really tough. And they said that’s okay, just leave it where it is.”

In Tucker’s experience, landlords that he has a good relationship with have been more forgiving. When the minimum wage increased in San Francisco, he said his landlord was understanding because he wanted a bookstore to remain in that space. “They have to want you there,” Tucker said. “If they don’t, they’re not going to negotiate with you.”

The panelists agreed that letters of recommendation always help when advocating for their stores. Booksellers should tell landlords what they do for local schools and the neighborhood, Tucker said, because they need to hear the importance of independent bookstores within a community. Customer recommendations help, too, Philbrick added.

“You want to think about the risks in your business for you specifically,” Hendrix said, recommending that booksellers host an informational meeting with a landlord to discuss what is or isn’t feasible. “What is it that you can’t live without? What’s a deal-stopper for you that you’re not going to give in on? What are the things that you can give in on and negotiate on? Whenever you set up that conversation with the landlord, be prepared to say what you want and what you need.”

For booksellers looking for more information about navigating rent, Philbrick recommended Shelf Awareness’ recent series on navigating rising rents