Location, Location, Location: 14 Little-known Factors to Consider When Choosing Your Location
> 's retail professionals we see missteps a lot. Business owners get excited about opening their first location. They do all of the research on the business model, it's competition, and had a comprehensive business land but often the okay is fine on the business's actual location is secondary see that which new franchisees and business owners. They are focused on signing up the franchise agreement and getting a territory locked up and they had a certain amount of time to open a specified number of locations. Figures like it they can Lendale good location quickly but many times the clock runs down and the franchise -- franchisee settles on a location not settled for their business.
New is this owners are excited to get on their way and sometimes settle on something good enough so what is the factors that go into selecting the right location?
The first is demographics. What are demographics. They are the actual statistical information that make up a defined area. For example how many people live in the area? Family households? What is the average household income? Daytime population at sector. Demographics are important because they help you determine if your customer is in the area that you want to open your business for example you would not want to open a day care center in an area with a high concentration of 55 and older communities. A day care business would be better suited for a community with a younger population-based.
You would not want to open a fast casual focused restaurant in a area with a low daytime population. That type of businesses better served located in an area with office building and high daytime population. The Mac lastly, you would want to open a high and jewelry business with a high average house hold income versus lower incomes. When looking at demographic data the area is defined in two ways: the radius or circle around the object property or more scientific drivetime that. The Mac on the screen you can see in the capital of the demographics around the proposed development site in Fort Lauderdale Florida. We used a 15 minute drivetime boundaries to determine the area. We chose 15 minutes for that week felt for our property people would try 15 minutes based upon the types of goods and services we are selling. Different property types at different lifetimes. Most people would drive are the Rahal people than they would for a meal salons are based upon your business use you can determine your appropriate drivetime for your demographics.
Another low-tech approach that you will be that is common is a radius and traditionally they are one, three, and five-mile rings around the subject property. Some are suited for this analysis better than others. On the analysis screen a three and five-mile Ringwood take up half of the ocean versus all people living up and down I-95. > Another thing you want to be aware of is cotenancy. Cotenancy is the shopping center in this -- industry term to describe the mix of other is this is in your shopping center. Pick properties that have a complementary mix of businesses . For example if you are opening a dry-cleaning business you look for co- tenants that serve the same type of daily meets customer . Supermarkets nail salons hair salons coffee chains at such a. You probably would not want to be in a property anchored by a Best Buy home depot or a movie theater as those tenants are not as frequent of a trip as dry-cleaning might be and probably not the same customer.: Tenants that drive a lot are also prefer herbal over tenants with less frequent of a drop. Think great supermarket versus furniture store if you are a furniture store you would like to be located near other furniture stores and co- tenancy is very important dependent upon the use and type of customer you are looking for. The Mac the next is square footage. The physical size of your space is critical to this success. It is like Goldilocks. You don't want it small or too big. It has be just right to fit the inventory you plan to sell or the services you plan to provide. If the space is too small you won't be able to hold enough inventory to provide amenities for your service. Limited space we should not enough product assortment lack of articles for long wait times and these could deter customers from returning. Alternatively if your space is too large will be paying for space you don't need which will hurt your profitability. A larger space requires more inventory which can tie up more working capital and in addition you should think about utility costs .. Subject to heat and cool a space larger than what you need. Once you know the optimal size of the space you need unique to think about this phase of your store . Shape of your small retail store is 80 to 100 feet long by 15 to 75 feet wide . Let's say you have determined you need 2000 ft.² to run your business depending upon the use or products or services you would sell the shape of this case can play a critical role in the business success. If you're 2000 ft.² space is 20 x 100' that might work but if it'd actually 100 125 feet deep in only 16 feet wide the same 2000 ft.² results in a narrow with which may not allowed you to fit in and not textures for displays and less storefront area and space for your side. Alternatively a 2000 ft.² the space 80 feet deep and 25 feet wide gives you more aisles and the largest warfront which gives you more presence and appearance of a larger store. You should be aware of columns in the space as well that may not allow for you to properly fixture in your space as you would like. > Let's talk about the infrastructure. Heating , ventilation and cooling commonly we for two as HVAC. Plumbing water and this is businesses requiring different services. Restaurant typically require more HVAC to keep the space school and ventilated versus a clothing store. Restaurants will require more electric and gas to power it was meant but if the phase space does not have this service is all you may want to in request the landlord to install it and if not that service may not be located close to your store and the cost to install could be substantial. HVAC is talked about in tons per square foot of space and average tonnage for a regular retail store is one time for 300 square one time for 300 ft.² of space. Restaurants are one time per one 50 ft.² which is double the amount of HPA's . Make sure your space has what you need. If not it could be into expensive to install.
Make sure the space has adequate restroom facilities for your use and meet current codes. Are the ADA compliant? If not you should ask the landlord to upgrade them. The Mac --
The common thinking about signage and the visibility as you want as much as you can get in this is true for many businesses typically impulse businesses like coffee fast food clothing etc. it is not true for all businesses. Destination business such as medical dental office take care kids party places of such a don't necessarily need all of the visibility. While it is not bad to have you will pay more and make sure your business has the visibility that you need before you rush to pay for it. > Parking. Parking is one of the most critical aspects of locating in a shopping center in that you need enough. Some businesses require more than others and you need to be aware of your cotenants and what they will utilize. Me sure there is enough for your business. While it is great to be next to a high-volume grocery store you may not want to be directly next door because your customers would have to pipe fight for parking. If your business requires quick stop and go such as a UPS store you may want 15 minutes reserved customer parking signs. If your customers cannot easily park they will go elsewhere. > Is it move in ready? Can you move right in or will it require extensional improvements. Depending upon your use in the prior tenant use you might be able to get away with minimal improvement so you may need to get the entire space and rebuild. If substantial improvements are required it is not in common to ask the landlord to pay for the improvement and roll those costs into your rent . This allows you to retain more working capital and spread out the cost of the improvements over the life of the lease . In the view of actual work a tenant improvement allowance or TI can be requested from the landlord and this is actual cash the landlord will provide to do the fit out and this will be rolled into the lease. Under this scenario you would be responsible to do all of the construction and be aware of what work you need to do and factor that into your deal when negotiating. Do not less the cost of the worker the scope of the project surprise you after you sign the lease.
Is it safe . Let's talk about safety. Chec k to see what type of security the property offers. Alarm systems can be added to any the landlord may also have on-site security and landlord systems. Many shopping centers are upgrading to new high-efficiency LED lights that make parking lot brighter and the safer but also reduce common area costs and your monthly common area maintenance bills. You can call your insurance agent to get an estimate on the insurance for the location and placed the call to the local police to check to see what types of incidents reports work with ported that the site and chances are you know the market but you don't want to be surprised. > The next thing to think about his competition. Depending upon the use you may want to be right across the street or you may want to locate in a hole in the market. Being near to your competition can enable you to benefit from the marketing efforts and prompt you to improve your offerings to shopping the competitive edge but being far away can allow you to fill in and unmet need in the community. It all depends upon the business. Furniture and apparel retailers like to be next to each other as consumers like to cross shop. Discounters specialty grocers and coffee retailers like to fill the unmet demand in a market sometimes as a little bit of both. When looking at a market map out competition to be where they are and if there is enough business in that trade area to service a completing the business end of so great answer and try to leverage and if not look for a trade area with unmet demands. > What are the zoning restrictions. As part of your search for a viable business location once you have identified a prospective right to research to check zoning to make sure that your business can operate in the exact location. Every city and town is different. Don't assume because it is a shopping center that any business and operate there may be restrictions on use is such as restaurants medical fitness or hours of operation or signage. The easiest thing to do is check the town website or Townhall to ask where to check local zoning codes and the local zoning attorney could help as well. > Once you have identified the market you want to be in locate the optimal size space and right property and then it is time to run numbers. When evaluating the space of your business make sure you understand all of the cost that will go into it. Make sure you compare apples to apples when comparing operating costs of different spaces and different properties. Base rent, maintenance cost , taxes, utilities etc. Look at your gross monthly rent and include all costs. One space rent might be lower but may not include cam and tax while another space will offer a higher all in rents. If the lease is triple net or gross, triple net means you pay a race pace rent and those rates can fluctuate verse versus a growth lease where the taxes are included. Also be aware of rental increases. Is the rent next for a certain period of time then increases? Or does it increase every year? A fixed rent in the beginning may give you more breathing room to get your business off the ground. > When comparing costs of space understand what is included in the rental quote. If it is six triple net lease it is and plus maintenance and tax charges. If it is a growth lease it will include maintenance and taxes but may not include other items such as trash removal additional security and utilities if they are not and always try to compare apples to apples. Finally the terms of the lease this is one of the most important things when selecting a location for your business. Details of all of the different classes could be another webinar but for now we will focus on the length of the lease. Short and long leases both have pluses and minuses. A long-term lease locks in rent and guarantees you will have space that if your business does not you will a short-term lease on the other hand offers more flexibility and if your business is the excess you will be stuck in a renegotiation in a short amount of time.
The best solution is a shorter-term lease with several tenant options to renew. Many landlords will offer options to renew that are at least As long as the initial primary term of the lease. > That takes us to the end of our course for today and at this time I'm happy to answer any questions you may have work > Thank you. We will start Q&A. In the time remaining we will address as many as we can but please submit your questions in the Q&A box at the bottom of your screen. If we don't have time to get to your question we encourage you to connect with a mentor after the webinar in the mentoring call these folks are also available online and you could find one at www. SCORE.find .find mentor.
First, what is the best way to find mixed use buildings to buy?
So the best way to go about finding real estate to purchases by going to a licensed real estate broker. You are able to do research online and you can look in the paper and I would encourage you to do all of that research to gain as much knowledge for yourself as you can but if the brokerage community really knows what is available in the market and they no other brokers listing properties and they will be able to help you find what you are looking for in the price range and scope of the property that you want to purchase. That would be my advice to find a local licensed commercial real estate broker different from a residential broker you want a commercial broker . > Okay next question from Donovan. What is the best way to ask your landlord to pay for tenant improvements and what is customary in this arrangement? > As part of any negotiation for space once you find the property and you were looking at the specific unit that you have interest in you will enter a phase of negotiations with the landlord where you will discuss things such as rent , rent escalations, term of your lease, guarantees, certain restrictions on what you are able to do and not do and exclusives in terms of what other tenant can boot do or not to do and as part of that whole negotiation you can negotiate for a tenant improvement allowance. I would not say there is any customary amount. It depends upon the use of your business and the rent that you pay. It really isn't free money. They will give you this money but it will get accurate it -- factored into the rent so without any allowance at $10.08 that they are giving you 10 or $20 per foot in allowance in cash . You could expect your rent to be easily 11 or $12 per foot as opposed to tend but you do pay for that money back in your rent and the amount you can request there really is no set amount but it is based on the type of business and the landlord will evaluate the request based upon things such as you send credit if you are doing a simple build out that doesn't require a lot of improvements but you are requesting a lot of capital of that will probably not work well versus if you are taking a space that is raw and you are opening a restaurant and you will put a lot of capital in then your request is for more money it will be viewed more favorably than the other scenario .
Next question from Olivia. Is there a way to test and established a track system in a space I am considering and who would I go to that for? > There is a way to do that and I would recommend that everybody do that before signing a lease . The best way to do it is to hire a local license HVAC person . A heating and air-conditioning person you can find online anywhere and make sure they are licensed and you will ask the landlord that you want to have your person come to check out the unit and they will tell you if it is in good working order or not. If it is then great. If not then you would certainly want to request that the landlord put the you did in two good working order before you take possession of the space because most often once you sign a lease the maintenance of that you that becomes your responsibilities are you want to make sure it is in good working order before you sign the lease.