Expanding Into New Locations: What to Consider Before You Sign the Lease

Introduction: Growth Comes with Great Responsibility

Expanding your leisure business to a new site is one of the most exciting — and risky — stages in your growth journey.

Whether you’re opening a second Laser Quest, a new soft play centre, or a competitive socialising concept, every new location represents opportunity and obligation in equal measure.

A strong lease can fuel years of success; a bad one can drain profits and limit your flexibility.

Here’s what you need to consider before signing the dotted line — from site selection and lease negotiation to understanding service charges, business rates, and hidden costs.

📍 Location, Location… Footfall

The right site can make or break your business. In leisure, visibility and accessibility are everything.

When evaluating potential sites, look at:

• Footfall: How much natural traffic does the area get? Shopping centres, mixed-use developments, and family entertainment zones perform best.

• Demographics: Does the local population align with your target audience (families, students, corporate groups)?

• Competitors: Are similar venues nearby — and if so, do they complement or compete?

• Parking and transport: Easy access for cars, buses, and trains can dramatically affect attendance.

• Noise restrictions: Some leisure uses (laser tag, bowling, axe throwing, etc.) aren’t ideal for mixed-use developments without proper insulation.

💬 Tip: Walk the area on a Saturday afternoon. See how people move, where families congregate, and which nearby venues thrive. You’ll learn more in an hour than in ten Google searches.

💷 Rent: Don’t Just Look at the Headline Number

Rent is often the biggest outgoing — and the easiest area to overspend on if you’re eager to secure a site.

When comparing rents, look beyond the annual figure and consider:

• Price per square foot: Most commercial rents are calculated this way. For example, £15psf on a 5,000sqft unit = £75,000 per annum.

• Lease length: A 10–15-year term gives stability but reduces flexibility.

• Rent-free period: Commonly negotiated to offset fit-out time (6–12 months is typical for leisure).

• Rent reviews: Usually every 5 years, either upwards-only or open-market.

💬 Tip: Rent should ideally sit at 10–15% of your projected annual turnover. If it’s higher, you risk cash flow strain — especially in slower months.

⚙️ Service Charges: The Hidden Cost That Adds Up

Service charges cover shared building and estate costs — cleaning, security, maintenance, insurance, etc.

These can range from £2–£10 per sq ft per year, depending on the type of development.

Always ask:

• What exactly does the charge include?

• Is it capped or variable?

• Are there sinking funds or planned works?

• Can you see a breakdown of historic costs?

💬 Pro Tip: Push for a capped service charge if possible. This gives cost certainty and prevents nasty surprises when landlords increase contributions for new works.

🧾 Business Rates: Understanding the Real Cost

Business rates are essentially a tax on occupancy — and they can rival your rent if not assessed carefully.

Rates are calculated based on the property’s rateable value, determined by the Valuation Office Agency (VOA).

To estimate your annual bill:

👉 Rateable Value × the current multiplier (set by the government) = annual rates bill.

You can check any property’s rateable value at: 🔗 www.gov.uk/find-business-rates

💬 Tips:

• Ask if your use (Class E leisure) qualifies for business rates relief — many leisure operators get 75% off under Retail, Hospitality & Leisure Relief.

• Consider how much space is actually rateable — storage areas or mezzanines may not be fully rated.

🧱 The Condition of the Space (and Fit-Out Costs)

Leisure venues are often let in shell condition — meaning no flooring, ceilings, electrics, or plumbing.

While this gives flexibility, it also means your fit-out budget will be substantial.

Before signing the lease, confirm:

• Are there toilets and running water already installed?

• Who pays for mains upgrades (power, water, waste)?

• Are there any restrictions on building works?

• Will you get a contribution or rent-free period during the build phase?

💬 Pro Tip: Always document the property’s condition before signing — a Schedule of Condition protects you from being blamed for pre-existing damage later.

🤝 Negotiating with the Landlord

Landlords expect negotiation — so don’t be afraid to ask.

Strong tenants (especially leisure brands with proven track records) are valuable because they draw footfall and often sign long leases. Use that leverage.

What to negotiate:

• Rent-free period (for fit-out).

• Service charge caps.

• Tenant-only break clause at year 5 or 10.

• Repair obligations limited to the property’s current condition.

• Option to renew the lease under the Landlord and Tenant Act 1954 (security of tenure).

💬 Tip: Approach with confidence — not desperation. Show your business plan, visitor numbers, and branding strength. Landlords love professional operators with proven performance.

📑 Legal and Professional Support

Never sign a commercial lease without independent legal advice.

A solicitor experienced in leisure and hospitality will help you understand:

• Repair and maintenance clauses.

• Assignment/subletting rights.

• Deposit terms and release conditions.

• Rent review mechanisms.

You’ll also need a chartered surveyor (for valuation and negotiation) and an accountant to ensure the numbers stack up.

💬 Tip: Legal fees for a small leisure unit can range from £1,000–£3,000, but they’re worth every penny if they save you from a costly clause later.

🧭 Financial Planning: Cash Flow & Cushion

Even with the best lease deal, opening a new site requires strong cash management.

Plan for:

• Deposits: 3–6 months’ rent + service charge.

• Fit-out: often £100–£150 per sq ft (depending on build complexity).

• Marketing: at least 5–10% of your total opening budget.

• Working capital buffer: 3 months of running costs before breakeven.

💬 Pro Tip: Factor in seasonal dips — if you open mid-year, ensure you’ve got reserves to get through the quiet summer or post-Christmas period.

🚀 Scalability and Exit Strategy

Finally, think long-term. A new site isn’t just a new address — it’s part of your brand’s story.

Ask yourself:

• Could this location support multiple revenue streams (e.g. laser tag + parties + café)?

• Is there room for future expansion?

• What happens if you want to assign or sell the lease later?

A well-structured lease gives flexibility to grow — or gracefully exit if the market shifts.

Conclusion: Build Smart, Grow Strong

Expanding into new locations is a milestone every leisure operator dreams of — but success depends on strategy, negotiation, and due diligence.

By understanding your lease inside-out and protecting your business from hidden costs, you’ll set yourself up for sustainable, profitable growth.

At LeisureBoost, we’ve helped operators across the UK plan and launch new venues — from site selection and brand development to marketing strategy and launch campaigns.

Thinking of expanding? Let’s make your next location your most successful yet.