Some tenants let you eat, some tenants let you sleep.

In the world of retail leasing, property owners are often faced with an interesting dilemma. Do they take the local or start up retailer paying the higher rent, or do they go with the national chain offering less rent, but many other benefits.

And the answer is, they are both viable alternatives, that depend entirely on the current situation of the owner and his/her short term and long term goals with the property.

National chains tend to pay a bit less rent, and generally seek more concessions, but the benefits they bring to the table are tangible. For instance, there is not a lender around who would not look much more favorable to a lease with a 200 store chain and significant balance sheet as opposed to a start up company. If it's a small building where the retail is the significant income generator, you will be able to refinance and probably take all your money off the table.

Additionally, national chains tend to spend more money in a space, as they generally do not skimp on construction items, but to the contrary go overboard. They usually redo all the electrical and mechanical systems and upgrade the space tremendously, and of course, there is the peace of mind that a large retailer brings to the table. You can feel pretty comfortable that this lease can go in the file cabinet not to be looked at for at least 10 years.

On the other hand, it was the late Sol Goldman's philosophy to take the rent, and a lot of it from whomever was willing to pay it, and should the tenant go out of business soon, so what, you will rent it again and get more rent because the space is at least in better condition than it was and the market just keeps getting better. It's hard to argue with Mr. Goldman's success.

Smaller tenants usually make decisions and get deals done a lot quicker than nationals, as you are dealing with the owner as opposed to the chains who have a hierarchy of people who need to weigh in, only to have some genius analyst in the home office in Topeka, Kansas, decide that this store is to close to their other store across town, and kill the deal, nullifying the six months work that went in to it.

Other things to consider are chains are less likely to be adventurous on CofO issues, such as selling out of a lower level that has not been zoned retail yet. A smaller, more experienced New York retailer realizes that changing CO's are for the most part a formality, but a potentially long formality at that, so while the chain will insist on the lease not starting until everything is 100% kosher, the mom and pop has been paying you rent for the past eight months and selling out of the downstairs, knowing very well, that the "lower level police" won't get them.

When you do a deal with a national, you are more than likely getting their standard sign package, color scheme and window display, and may have a hard time asking them to deviate from that to fit in within the confines of your building, while you are more likely to get a smaller operator to adapt to your building uniformity.

In conclusion, I am reminded of a line that the late great Stanley Stahl once said to me many years ago, upon my questioning him as to why he did a deal with a national chain client, when he clearly could have gotten more rent from another tenant. He simply said "Some tenants let you eat, and some tenants let you sleep."

It's your choice.

BY JEFFREY ROSEMAN, EXECUTIVE VICE PRESIDENT, PRINCIPAL, NEWMARK KNIGHT FRANK RETAIL