The commercial leasing and site-selection process is not easy or even enjoyable for most tenants. But predicable results can be achieved with some professional help and a proper game plan.
The core reason why commercial tenants struggle with and fail to lease the optimum site for their business is simply the lack of knowledge that comes from insufficient experience. If you combine that with impatience, you've got a disaster in the making.
As a commercial tenant, remember that just because a location or commercial property is good for one industry, it doesn't necessarily mean the property is universally as good or equally beneficial for all tenants.
To be clear, we're not talking about your love of a property or feeling good or confident that a location is right for your business. We're talking about doing your site-selection homework to ensure that your leased unit is right for you and your business. If your first priority is to find the right property, then you'll save time and energy by not working on lease deals that are better left alone because of their mediocre location.
When it comes to leasing commercial space, in general, you get what you pay for — and the more you pay, the better location. But if that were an absolute truth, all a tenant has to do is find the most expensive location for lease and then set up shop. But, it's not an absolute truth. Tenants frequently sign long-term lease agreements agreeing to pay rental rates that could have been negotiated much lower.
When you're looking for the right property (either initially or prior to a lease renewal), having a checklist of desirable criteria can help you stay on track. These variables don't change, but the value you credit them for any particular use may vary. In no specific order, here are the demographic aspects to consider:
Resident age: The average age of the people living in a particular area is extremely important to many business owners.
Income: As mean income and the proportion of two-income households vary, so do the ability and desire to spend disposable income at your place of business.
Ethnicity: Set up shop where your target customers already live if possible, rather than trying to make them come to you.
When it comes to choosing commercial space, tenants will have various options available. These include the following:
Inline space: This refers to a standard commercial retail unit (CRU) like you will see in a strip plaza or shopping mall. These units are "in line" with each other. This type of space is most common and typically allows for both smaller and larger concepts. Often, the landlord or developer will create inline CRUs that are about 1,200 square feet in size.
End cap units: These are located at the end of the strip plaza and often feature a front and side set of windows. These are especially desirable to quick service restaurants and coffee shop tenants if there is a drive-through window opportunity. Though many types of tenants may try to get the end cap unit, landlords often save them for the best and highest use tenant — who is also willing to pay higher rents.
Standalone or pad sites: These spaces are often close to the street with greater visibility and have parking available on all four sides of the building. This allows for more windows and a greater opportunity for patio space. One unique advantage to the standalone property is the ability to create an efficient drive-through business. With pad sites, the tenants have the option of leasing the land (for 20 years, for example) and constructing their own building. Alternatively, the tenant and the landlord can agree to a more conventional lease deal that involves a landlord-constructed building — sometimes with custom tenant specifications.
