Five Tips for Retail Site Selection
Finding the right location and the right price can be the secret path to success for any retailer. Many new retailers looking for space for the first time are too narrowly focused on just the rental rate.
Robert Tack, CEO of Capital Retail Group, a Washington DC based commercial real estate firm, says "While planning conservatively and within a reasonable budget is always smart, retailers need to include five other key components of site selection that are just as important."
Know Thy Customer
Knowing the customer is the prelude to any retail site selection. Premier retailers such as Starbucks and Target have developed precise customer and location profiles by combining hundreds of data points including historical customer sales data and detailed shopping demographics. New retailers won’t have such elaborate profiles but still can find free data sources. Retailers can create their own grading system by assigning a score to elements such visibility, access, daytime population, household income, and traffic counts. A minimum acceptable score can be applied as a guideline helping a retailer avoid choosing poor performing locations.
Know Thy Location
Focus on where the sales will be highest when evaluating locations. How much rent a retailer can afford is directly related to the sales revenue. Evaluating more expensive locations is justified if higher sales are projected as a return on investment.
Know Thy Market
It pays to know the current leasing market so retailers will know if the landlord’s asking rates are reasonable. Additionally, having several qualified choices readily available as a backup helps alleviate the frustration if lease negotiations break down on the first choice.
Know Thy Neighbor
Retailers should know the co tenants are in any shopping area they are considering. Foot traffic generated by synergistic or potentially competing co tenants can mean boom or bust to sales. Anchor or large tenants usually establish the basic customer profile, but the type of smaller tenants is as important.
Know Thy Landlord
Retail lease terms are for at least five but more commonly ten years committing landlord and tenant to a long term relationship. It is essential to know who owns and who operates the property. Researching the track record of a center’s ownership and management company is critical before making a final decision.
Founded in 2006., Capital Retail Group specializes in commercial brokerage, property management, and strategic advisory services to the retail and government sectors.