When it comes to finding a home for your new (or even expanding) business, there is a great deal of truth in the adage of “location, location, location.” The commercial space chosen by a tenant can be a deciding factor in the success or failure of the business.
Here are just a few of the additional factors you should evaluate when viewing available commercial space for lease and consider before signing on the dotted line:
Location within the location. Where is the commercial unit situated within the property? Would you be leasing inside a plaza/mall or on the pad outside? Would you be located at the end of an abandoned corridor or beside the busy food court?
Accessibility. How easily can your customers access your business? Are there stairs leading to your front door? If so, elderly customers may have difficulty getting to your door. If customers rely on an elevator within the commercial property to reach your business, when was it last inspected and/or serviced? Can drivers easily turn into your business’ parking lot, or do they have to cross in front of oncoming traffic?
Visibility. Can your business be seen from the street? Or, are there trees or other buildings blocking the view? Visibility by both drive-by and walk-by traffic is ideal.
Parking. Parking can be a highly contentious issue, and is one of the hardest things to correct after the lease has been signed. Typically, there are only so many parking spaces assigned and, once they are taken, they are gone. Negotiate for plenty of parking spots so that you, your staff, and your customers all have a place to leave vehicles. Consider where those parking spaces are located as well – the closer to your business door, the better.
Signage. What signage is available to you? What type of signage is this? Where is it located? Can you place signage on the side or the rear of the building? Where would your business name be placed on a common pylon sign shared by other tenants? Would you be charged for any additional signage requested? Negotiate now for “grand opening” or “promotional” signage (e.g. banners and/or pull-away signs).
Neighbouring tenants. Ascertain who is doing business directly next door to you. Will this tenant be conducive or detrimental to your business? While asking the landlord/landlord’s agent about these neighbouring tenants, it can be a good idea to meet and quiz these tenants for yourself. Be friendly and polite and introduce yourself as a prospective new tenant.
Anchor tenants. These are the major businesses/retailers which pull customer traffic to a property. Typically, they are major grocery or department stores; however, this is not always the case. Consider the stability of those anchors. How long have they remained in the property? Are they planning to remain or to move? We remember how many tenants leasing in a small shopping plaza were caught off-guard when the major grocery store anchor moved out. Major grocery chains frequently continue to pay rent on a vacant commercial space to avoid having a competitor move in.
Competition. Before you commit to leasing a location, scout the neighbourhood to see if you have any nearby competitors. Become acutely aware of your competitor’s services, products, and pricing. One easy and effective way to do this is by means of a secret shopper. Ask your secret shopper to visit your competitor(s), report back on their experience, and quiz them about your business (if you are already open) and whether they are badmouthing you to their customers. Do not just evaluate your current competition, but also consider future competitors who may move in to the area. Franchisors, for example, may be exploring opportunities, and may have a competing franchisee move in just down the street from you. You can contact franchisors to see if they are planning to come to your city or town.
As The Lease Coach since 1993, we have helped many new and existing franchise tenants negotiate first-time leases and lease renewals, as well as choose the most appropriate business location. A good business in a poor location ultimately becomes a poor business.
Dale Willerton and Jeff Grandfield
Commercial Lease Consultants
The Lease Coach