All of the buzz today is “online shopping” and “e-commerce.” This may not come as a surprise, considering more people than ever are utilizing the convenience of online shopping. However, this doesn’t mean that, as a small business owner, you should forego having a retail space to sell your goods.
Although research firm Forrester estimates that 53% of all purchase decisions are digitally influenced, it states that 86% of retail sales in the United States still occur in brick-and-mortar stores.
Electing not to have a storefront for your retail business could have you missing out on valuable sales and profits.
But even if you accept that you need a retail property for your business, finding the right spot can be a daunting task. There are many different elements to take into consideration, including location, size, and various amenities. On top of this, you’ll likely need to consult with a real estate broker and an attorney to negotiate the best lease terms.
In this article, you’ll find everything you need to know about retail spaces. We’ll start by listing some of the advantages and benefits of having a retail store. Then we’ll move on to the steps you need to take to secure a retail location.
What is a retail space?
Retail space is the location where retailers sell products to customers. Retail spaces can exist everywhere from strip malls and shopping centers to stand-alone buildings. Typically, you can either buy or rent retail space.
Retail spaces are different from office space and commercial properties. Retail spaces are designed for the customer. The store itself is clean and presentable, designed to show off products.
Retail spaces are also optimized for foot traffic so that customers can move freely throughout the store to browse products. Retail spaces likely also have some sort of storage where owners can house merchandise and manage inventory turnover, replacing merchandise on the floor once it’s sold.
Similarly, retail space promotes accessibility. You may find retail spaces near “anchor stores,” which are attractions like grocery stores and department stores that tend to draw a lot of foot traffic. Retail stores also often have large parking lots that make it easy for employees and customers to park.
Commercial and office spaces, on the other hand, are designed for different purposes. They offer practicality in a different sense. Instead of being optimized for foot traffic, they’re designed for productivity. Commercial and office spaces may have things like:
- Office supplies
- Heavy machinery or equipment
- Reception areas
- Conference rooms
Since it’s typically only employees who go to the commercial and office space on a day-to-day basis, location isn’t as important. For instance, you’re more likely to find retail spaces in a “front and center” location, whereas you may find office spaces tucked away off the highway in a more remote location.
When searching for retail space for lease, owners will likely find themselves more concerned with driving foot traffic.
When searching for office space for lease, business owners are probably looking for a centralized location that will make the commute easy for employees, no matter where it is.
Furthermore, the parking lots at commercial spaces tend not to be nearly as large as they are at retail spaces since commercial spots don’t receive as many visitors.
The benefits of retail space
Reading about “foot traffic designs” and “large parking lots” may have you wondering if the potential cost of a retail space is worth it. Even in today’s e-commerce society, retail spaces offer advantages that could be worthwhile for small business owners.
Even with the rise in e-commerce, there’s plenty of opportunity to be had with retail spaces. One recent article from the New York Times stated, “an age of online shopping has, surprisingly, led to an exciting time for shoppers to get back out onto city streets to explore new, innovative shops.”
The article continued, “Rather than crushing physical stores, the rise of online shopping is, in many cases, encouraging the development of new and innovative retail shops.”
Additionally, research finds that consumers prefer purchasing in-store. They tend to prefer browsing and researching online, so you may need to invest in digital marketing. But consumers make their actual purchases in-store.
Setting up a retail space could open a revenue stream for your company.
Build a brand
Having a retail store, in and of itself, can serve as a form of marketing. When consumers drive their car or walk past your location, you’re promoting yourself. Making your store a visible, convenient fixture in the community will help build your brand.
Additionally, having a brick-and-mortar location allows consumers to see your product and test it. They can see the quality of what you’re producing. Creating a great shopping experience and allowing your retail space to serve as a showroom can lend credibility to your brand.
If you build a local following, people will begin talking about your company, and you’ll create an authentic “buzz.” If you decide to expand into e-commerce, you’ll already have customers willing to purchase your product.
Another advantage of having a retail space is being able to provide consumers with an incredible customer experience. You can set yourself apart by offering exceptional customer service that consumers can’t find when shopping online.
Having a physical location allows your brand and your culture to shine through. Additionally, you can use your retail location to get customer feedback. Imagine you only exist as an e-commerce company.
Someone browses your products and may even put something in his or her shopping cart. However, they then leave your site and never return. What was the reason? What about your product made them leave your site? You may never know.
However, if you have a physical location, you can gain knowledge and insights from the customer. You can then implement this feedback to help improve your product and customer service to help make sure customers stick around.
Finding a retail space
Now that you’ve decided it’s time to secure retail space, you’re likely wondering how you can go about doing so. Below, you’ll find a step-by-step guide to help you do so.
1. Determine the type of space you need
You want to have a clear idea of what type of space you want before you begin your search. You may realize that you need your space to have certain features. For instance, if you sell clothing, you may want to have dressing rooms in your retail space. Here are some other factors to take into consideration:
- Location: The neighborhood you choose can be key to your business’s success. Setting up a bathing suit store in Alaska may not work.
- Traffic: Aside from traffic patterns, you’ll also want to consider foot traffic and ease of access to your location.
- Size: Make sure you know how much space you need. Take into account your current and future needs so you can grow within the space. Building space is defined in square feet. Research other stores in your area and find out how big they are to help get a better idea of how much space you’ll need.
- Budget: Have a good idea of what you can afford, and make sure the type of space you want fits within that budget. Using accounting software will ensure your finances are in order and help you with forecasting.
- Utilities: Depending on your type of business, a lease that includes your water or electricity bill could tip the balance when all other factors are equal.
- Amenities: Review what type of special options you might want to consider, including building amenities like security, fire prevention, and parking.
2. Find a real estate broker
You can search on your own, but real estate brokers often have access to listings you don’t. Plus, they’re typically qualified negotiators with a track record of negotiating rental agreements and lease terms with landlords. You’ll need to find a commercial real estate broker to help.
Although you aren’t looking for office space, a commercial real estate broker deals with retail spaces and other business buildings, as opposed to personal homes.
To find a commercial real estate broker, you can ask local business owners for recommendations. You can also search the National Association of Realtors or your state’s realtor association for agents who specialize in commercial real estate.
If you don’t feel the cost of a real estate broker is worth it, you can conduct your own online search using LoopNet, which is free to the public. You can also go out in your local area and search for any posted signs for available spaces. You can call and speak with the landlord or agent directly to find out more information.
Always make sure you work with a broker or attorney when negotiating the lease unless you have considerable experience in that arena.
3. Scout the space
Once your real estate agent has delivered a list of possibilities, it’s time to tour each of the spaces, keeping a careful eye on the amenities you’re looking for.
In reality, looking for a commercial space is not that different from looking for a residential one. You want to be sure you’re in a good neighborhood with easy access to the surrounding area, curb appeal, and good traffic patterns.
You also need to make sure this all fits into your budget. You may not find the perfect space, so you should know which features are “must-haves” and which you’re willing to be flexible on.
4. Negotiate the terms of the lease and special features
When it comes time to sign on the dotted line, make sure you’ve negotiated the best possible rate for your space. One way to ensure this is to work with an attorney specializing in commercial real estate who can review the lease for any potential pitfalls and make sure you’re protected when the lease comes to a close.
Helpful tip to finding a real estate attorney. Ask other local business owners for a recommendation or ask your real estate broker for a referral. Referrals from other professionals are typically good validation that the person you are hiring can do the job you need them to.
Secure your retail space today
Your retail space will be the visual representation of your business and is, therefore, a very important piece of your success.
Securing and maintaining a retail space could be a large cost for your company, but it could also allow you to build your brand and customer following, opening up new income streams.
If you’ve never secured real estate before, make sure you work with a real estate professional. By working closely with a professional real estate broker — one who can develop a list of features and amenities you need and negotiate the best possible lease — you can move into a space that’ll work for both you and your company for years.