Choosing a Location

Choosing a Location

Selecting the ideal location for your new retail store is vital to the long term success of your business. Before you choose a location, store owners should define the profile of the target customer, determine the products you plan to sell, and estimate how much space you will need. Your ability to do comprehensive research is key to making the right decision. Just because a location has high traffic and good visibility does not mean that those factors will translate to customers through your door. Make sure you analyze whether or not the traffic matches the profile of your target customer. For small retailers, locating your store near a popular anchor store could benefit your business.

Other Factors To Consider

  • Do you know the amount of people that drive or walk by your location?
  • Is your sign/store visible from the main street?
  • Is there ample parking for your customers?
  • Can delivery vehicles easily access your delivery door?
  • Is there public transportation nearby?
  • How many and how close are your competitors?
  • Is the store located in a high crime area?
  • Are there any blue laws? Laws prohibiting certain activities, such as shopping, on a Sunday.

Negotiating a Lease

A lease is a legally enforceable contract between the landlord (lessor) and a tenant (lessee) in which the tenant agrees to pay to a landlord a monthly rental fee to take possession of a property for a certain period of time. The most common type of lease in the retail industry is known as a triple-net lease. Under a triple-net lease, the tenant not only makes a fixed monthly rent payment but may also be required to pay for other expenses such as snow removal, security, and other building expenses. In addition, the tenant is often required to pay for real estate taxes and insurance on a pro-rata basis. The most common type of lease in the retail industry is known as a triple-net lease.

Commercial space is typically calculated by a cost per square foot formula.

Total Square Feet X Price Per Square Foot / 12 Months = Your Monthly Rent

Before you sign your lease it is always smart to consult with an experienced real estate attorney. Effectively negotiating a lease for your retail store can provide long term savings for retailers.

Factors to Consider when Negotiating Your Lease Agreement

  • Is there a provision allowing you to sublease or assign your space?
  • Is your landlord willing pay for all or part of the needed improvements to the unit?
  • Can you sign a longer lease to reduce monthly rent payments?
  • Does your lease provide a buyout option?
  • Will your landlord discount your rent for the first few months to cover moving expenses?
  • Is your landlord asking for a percentage of sales in addition to monthly rent and other associated expenses?
  • Is there an annual increase in rent or other fees?

Although all the terms of your lease are negotiable, keep in mind that your ability to negotiate will be determined by the supply and demand for retail space in that area.

Need store fixtures for your new location? Check out these racks & display cases!

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