What to Consider When Renting Commercial Space

Over the last 20 years many stories claim brick and mortar is doomed. Retail shopping is a relic. To some maybe it holds true. We live in exciting times. The advent of electronic retail. We can sit on our sofa and shop, shop, shop then flop. More ingenious ways to make purchases without leaving our seats is causing many businesses to abandon a retail storefront or a commercial office space. Whether traditional retail truly goes by the wayside is a debate we will have for years to come. For now, retail found some tricks up its sleeves. One domestic chain made a partnership with a behemoth online retailer to accept returns at their stores. How can this be, isn’t online retail and brick and mortar in a consumer war? Some companies may think that way, right or wrong for their own reasons.

https://www.youtube.com/watch?v=JmzuRXLzqKk

“Ghostbusters” 1984 Columbia Pictures — Bill Murray “Peter Venkman” and Ernie Hudson “Winston Zeddemore” pictured

There is a strong reason to consider retail space. After all, a dynamic ultra-cool brand like Tesla Motors sees the value in brick and mortar. If a brand you follow is staying in traditional retail, then it is a strong indicator all is not lost for the shopping experience 1.0 — brick and mortar. We can make smarter choices by going into a store, picking up the object of our affection, deciding if it’s the right purchase.

Now, for those businesses struggling with the decision to rent space, it is reasonable to approach cautiously. Many of us heard the phrase, “location, location, location”. It is repeated because it is true. I can think of several businesses thriving despite a not so easy to find location. What’s their “secret sauce”? Maybe it is a sauce, maybe it’s the customer experience. Whatever it is, location be damned. Be careful, you may think your product or service is the best thing since wi-fi. If it is, send me a sample.

Now that you considered your pros and cons, renting commercial space is the choice, what next? There are many factors to consider. Yes, location is top of the list. Ease of parking or proximity to public transit, signage — what does the property owner allow, what does the municipality allow, do they enforce color schemes not in line with your brand, if so is this a compromise you are willing to make? Does the property manager communicate? The last thing a business needs is a derelict property owner. A fair question to ask, would you frequent this location as a consumer? If your answer is no, be confident it is a sign to say thanks, but no thanks. Does the management company require you pay for all utilities and waste removal? What is the total overhead expense for example; rents, length of lease, assessments for improvements, conditional provisions? Is the property for sale? If so, what contractually is the current owner bound to do for you as a condition of sale?

So many things to consider, speaking with a commercial or industrial real estate professional is wise. He or she is typically well versed in local municipal codes and what the rental inventory is for locations you are targeting. Additionally, the real estate professional may be aware of space for sale within your budget. If so, purchase of an asset may be a worthwhile consideration.

When searching for your retail space it is important to observe your surroundings. What other types of businesses are in proximity? Are there too many competitors or businesses that draw an unlikely customer base for your industry? An example, if your business is a medical office, are there pharmacies and medical supply stores near? If there were three factors that made a business primed for success, the location you choose is one in any situation.

Depending on your product or service retail space may not be a need for you. Renting space or purchasing a property as an asset includes not just a price tag be it rent, lease or mortgage, it requires upkeep. Renting often is a sensible starting point to gauge the viability of maintaining a retail store front, or a tradition office environment.

Many consumers value the ability to walk into a professional setting. It adds credibility in the mind of clients and is a strong sign of professionalism. Any service professional with a home-based business doing so to eliminate the cost of rents is potentially setting themselves up for an income plateau. Earning new clients is a necessity for start-ups and businesses in growth mode. A common solution is to meet clients at a café to substitute for a formal work space. Over time clients will view you as unprofessional. Lack of privacy, demonstration of a successful business is absent in a public space.

Think about your buying habits. Do you go to a big box store to compare products, demo the product to determine your preference? Whether you ultimately buy online, the brick and mortar served a valuable function to you. Retail stores also opens up the all too common impulse buy trigger in us. We go into a retail store with a mission to look, not buy and end up buying something we decided we wanted. There are some very clever online retailers seducing us to make an impulse purchase, the customer experience is not only reserved for brick and mortar.

Think wisely and critically what is most important to the growth of your business and the ease of scalability. There is no simple answer no matter what your industry average portrays with respect to an online only platform, brick and mortar or a hybrid of operations utilizing both options.

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