SUBJECT AREA - SITE SELECTION
Location. Location. Location.
We have all heard this expression. I believe it represents the 3 levels to identify and lease a premier site.
1. Trade area analysis: When you and your broker have identified numerous shopping centers which are going to be a part of an upcoming site tour, they will normally provide you with a demographic profile based on the exact location of the shopping center. Based on the strength of the center, which is tied to the anchors your center may draw from 1,2,3 miles or maybe 1,3,5 miles. Since the demographic profile and number of people and income levels could be radically different within these demographic rings place them side by side. Ask yourself: Have I made sure your ideal customer profile lives in the area and shops in this center? Does the area have retail synergy? Strong traffic counts? Numerous businesses with strong employee counts nearby? Comparing demo reports side by side will allow you to select the stronger trade area to help maximize your sales potential.
2. Site Identification: Throughout my years of experience, I have heard the following expression used over and over. “It’s a great location EXCEPT”. To which I would tell my clients and franchisees, “if you use the word except it’s not a great location.” Great Visibility? Ample and convenient parking? Full access curb cut? Proper square footage? What about “off market opportunities?” Has your “boots on the ground” broker researched these? I have seen clients stubbornly push ahead and open locations that fit that expression, “it’s a great location except.” When sales turned out to be marginal, it was normally the words that followed the word “except” that was the reason. Pass on all sites that are “great locations, except”.
3. Deal Package Components: After you complete your site tour with your broker, a typical tenant will normally start processing up to three real good sites. Either the landlord or the tenant may draft a Letter of Intent. (LOI) In my years of experience it has always been my preference (representing the tenant) to generate the LOI because then I can include provisions or requests within the LOI to address individual circumstances within the spaces being considered. Once the landlord (or tenant) receives the LOI they will normally counter to the offer being submitted. The PRS website has dedicated the Leasing Variables Subject Area to this most important part of the store opening process. A few of the LOI provisions include: Term and Options, Tenant Allowance, Free Rent, Exclusive, enough Build-out time, NNN defined, Relocation clause deleted, Percentage Rent deleted, Landlord Marketing Requirement deleted, etc. Once the landlord counter proposal has been received by the tenant you will immediately see which landlord is working hard to secure you as their tenant and which one has little interest.