For many New Zealand retailers, the past few years have seen weak consumer demand and rising costs. The signs of recovery coming into 2026 were disrupted by events in the Middle East increasing fuel costs and creating uncertainty. Oil prices started easing in late June, but prices are still volatile and consumers are still cautious about their discretionary spending.

In difficult trading conditions like these, retailers may tend to think of their lease as simply a fixed overhead. But in fact, your lease is one of the few significant business costs that can often be renegotiated.

In practice, tenants may not have to shoulder all of the risk of weaker demand

Leases are usually negotiated in one trading environment and then lived through in another. What looked sustainable when demand was stronger can become restrictive when consumer confidence weakens. Or it could be that for other reasons a location no longer performs as you expected, perhaps through changes in foot or vehicle traffic, or infrastructure work going on outside your shopfront.

Legally, the tenant will often carry much of that risk of lower demand. A lease will often limit the landlord’s liability if the premises or wider area become less commercially attractive for the tenant, so a drop-off in trade won’t automatically entitle the tenant to rent relief.

But in reality some lease relief may still be available to you. Landlords are often willing to discuss your lease terms before rent arrears build up or your business gets into serious difficulties.

Many retailers overlook their hidden leverage

Landlords generally can’t terminate a lease immediately for default. Statutory processes and, in some cases, court remedies can create time and space for you to have commercial discussions with your landlord before your tenancy ends.

For landlords, reletting also comes with costs, such as agency commissions, fit-out contributions, or rent-free incentives – plus the risk that the next tenant will be financially weaker. Those costs can sometimes make it more attractive to offer concessions to the existing tenant.

So the real question is not whether relief is available in theory, but rather what form of relief might you be able to negotiate in practice.

Of course, broader economic pressures won’t be felt in the same way by all retail businesses. A mall-based discretionary retailer, a regional main-street operator and a multi-site chain can face very different leasing issues. The right approach in seeking relief will depend on the business, the premises and the local market.

Lease relief generally falls into three categories:

• reducing your costs now,
• reducing your future commitments, or
• creating greater flexibility.

As well as reducing or deferring rent now, your options could include easing future commitments

Timing matters, so review the key clauses in your lease immediately

Whatever pathway opens up for you, timing matters. Retailers are generally better served by engaging with landlords early on. When you talk to your landlord, explain the business’s position clearly, and support your request for relief with realistic financial information.

Before approaching your landlord, have a good look at key provisions in your lease dealing with rent reviews, renewals, assignment, subletting, outgoings, defaults and any rent-abatement rights. Even if the lease doesn’t explicitly entitle you to some kind of relief, those provisions will often influence your negotiating position and the available alternatives.

If negotiation fails, flexibility still matters, so consider assigning or subletting

Not every landlord will agree to making concessions, and some may be constrained by their own financial situation or portfolio requirements, or by their ownership structure. When that happens, the next question is whether the lease offers another way to reduce your burden.

One pathway is assignment – that is, finding a third party to take over the lease for the rest of the term, usually with the landlord’s consent.

Another option is subletting part of the premises. This can be useful when you want to retain a presence in the location but also need to reduce your footprint, share occupancy costs or make better use of surplus space.

In either case, get advice early on whether you will need the landlord’s consent and about any risks the assignment or sublease document should address, as well as on the practical likelihood of securing an assignee or subtenant.

Waiting and seeing could make things harder

Although your lease may not provide automatic relief when business conditions deteriorate, it can still allow you opportunities for renegotiating or exiting the lease.

Retailers that understand their lease, get advice early on and engage with their landlord before problems become critical will usually be in a stronger position than those who wait.