If you were to talk to most people they would tell you that real estate is critical to a retailer’s success and that it is all about location, location, location. I couldn’t agree more, but what is it that makes some retail locations extremely successful while others seem to have constant turnover? Let the tenant representation experts put their knowledge to work for you. In this article, we will focus on the top five considerations to pay attention to when leasing retail space for a small business. These considerations emphasize lease opportunities that can make or break a retail business from an operational standpoint.
Demographic information used to be more difficult to attain but in this information age it has become more readily and easily available. A good brokerage will pull key demographic information on your behalf within a given radius alongside commercial listing options. Most reports focus on a 1, 3 or 5-mile radius report and this should be sufficient for most business owners.
The key demographic characteristics for leased space to look at are population size, median household income, average household income, daytime population, number of households, and consumer spending. If your business is part of a corporate or franchise organization you will have the opportunity to request the demographics for the top three stores to help you identify your target demographic opportunity.
What good is a retail lease location if people cannot see you or access your location? This is where it is important to understand your industry and what your clients would want in your business. Is your business a destination company or does it benefit from a high level of traffic or visibility? Either way high traffic counts will always help with branding, visibility, and impulse buying which is especially important in a retail business. Anything over 30,000 vehicles per day (VPD) is worth paying a little more for the extra marketing and exposure. Be sure to get traffic counts from your broker and target centers on all nearby major thoroughfares.
Visibility & Signage
Aside from strong demographics and heavy car traffic, visibility and good signage are also important to a retail business location. It is important to consider negotiating for the best sign package available and obtain signs that match the top sign packages already located in the retail center. If there is any kind of highway exposure on the back or side of your retail space request permission from your landlord to put additional lighted signage in those areas. Know that the city has most of the say in regards to signage and then most landlords will accommodate your signage based on local jurisdiction.
Access is important – the easier it is for a client to reach your business location, the easier it will be for them to do business with you. Where you can, pay top consideration to centers that have multiple access points, from multiple streets and have at least one full signal intersection. I can’t underline enough that if there are any hurdles to accessing your retail location, this will directly affect your business.
Last but not least parking is very important to a retail business. Make note of the other local tenants and what their parking requirements will be as you will want to ensure there is going to be enough parking for your clients as well. To best understand the parking situation, be sure to ask the listing agent for the parking ratio. We recommend the ratio be no less than five parking spaces per thousand square feet. If your business is located in the city, make a mental note of parking garages, parking surface lots, street parking, and meter times in proximity to the location. Always request designated parking for your clients where possible.
While these top five considerations are a great place to start when looking for a retail space, it is important to discuss with your broker what is important to you and your business so they can best serve your business. Give Transworld a call today to discuss your commercial lease needs in person.
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Phil Kubat is the Principal & Managing Broker of Transworld Commercial Real Estate, a Colorado commercial real estate firm. Transworld Commercial Real Estate will serve as a strategic partner to clients for commercial real estate acquisitions and dispositions. Phil’s services include real estate advisory, site selection, strategic planning, incentive negotiations, development consulting, and financial analysis. In his spare time Phil enjoys hiking, skiing, golfing, and living life to the fullest!