Where you lease retail space is critical in the race to a black bottom line, but ensuring that you find the exact blend of location and cost can be tricky. There are ways to know that you’ve found the right retail space, though. Read on to learn the four C’s of a successful hunt: convenience, cost, clauses, and competition.
Your first concern should always be your customers. After all, they are the lifeblood of your business. That said, the first thing to consider is how convenient your location will be for your target demographic to find you.
Is there adequate customer parking available? Will the space accommodate your customers comfortably? An out-of-the-way location with little parking that’s too cramped to move around in will turn off customers and limit your potential.
Easy access from major roadways, a spacious parking area, and plenty of interior space, on the other hand, shows customers that you care about their needs and not just their money.
When it comes to cost, look beyond the bottom line. The monthly rent a landlord quotes is really just the tip of the proverbial iceberg, and what lurks below the surface can be pretty scary. The good news is that initial costs are mostly one-offs, and then you’re only paying the lease every month. Assessed fees like trash removal, utilities, and property taxes are typically paid quarterly.
If you’re really lucky, you’ve found a space that is ready for occupancy. But the reality is that any space may need an upfit, and construction costs these days are often through the roof. You’ll also need signage so that your customers can find you, which means design, manufacturing, and installation costs. Then you will also need a business permit from the county, city, or both.
The basis for your annual rent increase is totally up to the landlord’s discretion. It could be something reasonable like the consumer price index or square foot pricing for similar space in the area, or they could be asking you to foot the bill for them to redecorate their beach house. Negotiate those escalation metrics before you sign anything.
Clauses and Considerations
Put simply, read the fine print. Your location is crucial to your business’s success. Make sure you have an escape clause in case the city is planning on relaying water lines on your street in the next year, but they haven’t made that detail public yet.
That’s an extreme example, but you do need to negotiate an elegant out in case of unforeseen circumstances. Here are some other clauses to consider:
- Renovation Restrictions: Double check that your upfit alterations are within the scope of the lease.
- Exclusive Use: Negotiate a non-competitor clause that prohibits your competition from leasing space in the same shopping center or building. If you’re a pop-up or seasonal business, this is really important. You want to be the only monogram shop in the mall.
- Co-Tenancy: If you’re the aforementioned monogram shop and choose your spot because of a big department store—the anchor tenant— in the same shopping center, then you should have an exit if that business leaves the space and your primary business funnel dries up.
- Sublease: If at all possible, negotiate to sublease if you need to move or close. Subleasing gives you the flexibility to offer pop-ups or store-within-a-store tenants.
Sussing out retail space is one task where Wikipedia is a great source. A quick Wiki search provides the bare-bones demographics you need to start your search, and sites like niche.com flesh out the neighborhoods. This narrows the time that you spend cruising for competing donut shops in your target neighborhoods.
Now, for a bit of counterintuitive thinking. Do you want to be the first shop on the block, or do you want your donut shop in an area where there’s already a couple of fried-treat options? Typically, the right answer is the latter. Find a location as close to your competition as you can. Why? Because somebody else has already done the research and decided that the demographics are solid. Also, customers are already used to going to that area for their morning coffee and cream-filled pastry treat.
If you’re in the market for retail space, we’re happy to discuss your needs. We’ve helped hundreds of businesses find their perfect retail, office, and industrial spaces, and we’d be delighted to work with you. Contact us today for more information.