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How to Choose the Perfect Location for Your Retail Business
May 10, 2022
Person looking at shopping center map choosing location

Choosing a location for your retail business is one of the most important startup decisions you'll make. Location can make or break a store.

This guide will help you find the ideal space for your retail business.

To help you with your search, work with a Landlord’s leasing representative or commercial real estate broker. A large shopping center company may have several available retail spaces in the geographic area that you select. A good broker with experience may also be helpful. Ask other business people or local professionals for recommendations.

Also, before searching for a location, complete your business plan to determine the square footage and layout that best fits your brand. Retail locations come in many formats, including:

  • Enclosed shopping malls
  • Open-air shopping centers
  • Neighborhood grocer/drug store center
  • Pedestrian areas, such as downtown shopping streets
  • Freestanding kiosks or carts

As you assess locations, ask yourself these questions:

  1. Are there enough potential customers nearby? Choose a location where many of your target customers live or work. If you're opening a toy store, for example, locating it in a college town full of single twenty-somethings wouldn't make sense. Your demographic research will help you pinpoint the best locations. Ask about the average foot and vehicle traffic. Your leasing representative should have car counts for each location, but you should also “stake out” spots you’re considering and see how many passersby they attract during the hours you’ll be open.
  2. Is the space accessible? Look for a location that’s easy to see and find, with plenty of customer parking in the front. Consider how easily vendors can deliver inventory. For example, if you're opening a furniture store, you need enough space for trucks to park and maneuver furniture through a back entrance.
  3. Is it move-in ready? Many retail spaces will require modifications to suit your needs. Build-outs or leasehold improvements, such as tearing down or adding walls or rewiring the electrical system, can significantly add to costs (and to the time required to get up and running). You can sometimes negotiate with Landlords to help share some of these costs or get some free rent to offset your investment.
  4. What are the neighbors like? Complementary, but not competing businesses are ideal neighbors. If you want to sell high-end women's apparel, locating near other upscale women's apparel, accessories, and jewelry stores is a plus, because apparel shoppers typically visit several stores. On the other hand, an aquarium supplies store wouldn't want a similar store down the street. Locating near restaurants or entertainment venues, or even a big-box store, can benefit your store if those businesses attract your target customer base. Don’t assume the current tenant mix will stay the same. Ask the Landlord about any competing stores moving into the shopping center that may impact your business.
  5. What are the local zoning restrictions? Find out if there are any zoning laws affecting your store. For instance, there may be restrictions on hours of operation, the type of signage you can put up, or your type of “business use” on the premises.
  6. Is the infrastructure adequate? If you’re considering older buildings, make sure they have adequate heating, cooling, plumbing, and electrical systems, as well as Internet service. What restroom facilities are available for employees and customers?
  7. What is included in the rent? In addition to utilities, ask about services such as janitorial, trash removal, security, real estate taxes, and maintenance of common areas, such as parking lots.
  8. Is it safe? Find out what type of security the building has, such as alarm or camera systems and security guards. Make sure the parking area is safe and well-lit after dark. Ask your insurance agent to estimate insurance costs at each location you’re considering.
  9. What are the lease terms? Signing a longer-term lease locks in your rent, but if your business doesn’t succeed, you’re still on the hook. A shorter-term lease gives you more flexibility but also leaves you vulnerable to a steep rent increase when the lease is up. Retail leases are complex, so have your attorney review the lease before you sign. Last, but not least, remember that there's always room for negotiation.

Devote time, thought, and consideration to your choice of location. With careful research and help from a Landlord leasing representative or qualified commercial real estate broker, you’ll find the perfect retail space.

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Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

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