Whether you are a startup company or an existing business, looking for a new location can be overwhelming. A Commercial Real Estate agent can be a great asset during this process, but how do you know if an agent is experienced and can help you and your business?
After the initial contact and introductions are over, what are the first three questions an experienced Real Estate agent should ask you?
- What type of business do you have?
- Is it Destination or Location/Impulse based?
- Are you looking to buy or lease?
The answers to these questions will help the agent to determine which course of action to follow, in the search for your Destination or Location property.
After you have engaged the services of an experienced Real Estate agent, you should heed their advice and work exclusively with them, for whatever timeframe is specified in your agreement. Once you have expressed what you are looking for, the agent’s experience and knowledge will help to shorten the search for your Destination or Location property.
Some business owners think they need a location with large signage and high visibility, but these types of locations typically have higher rents compared to space located in shopping or commerce centers. If you have a destination business, you may not need this type of visibility. You may also find better deals tucked behind other businesses.
However, if you have a location/impulse based business that requires higher visibility and traffic, look for a location with a tenant mix that attracts customers similar to yours, and that complements your business. Pay particular consideration to who the anchor tenants are, because the type of business they draw will make up a majority of the center’s customer base.
You should also know, as accurately as possible, how much square footage you need to support the service, products and inventory you will offer, as well as the furniture, fixtures and equipment (FF&E) you will need to operate your business.
Another consideration is daily population fluctuations. For instance, if you own a restaurant that needs a heavy lunch and dinner business, then you should locate your restaurant in an area where there are numerous places of employment and/or shopping, rather than in a bedroom community.
Real Estate Terminology:
Destination business – Your business doesn’t need foot or drive-by traffic to be a success. Your distinctiveness or branding compels people to arrive there by making a conscious decision to do so. People know who or where you are, and will drive off the beaten path to get there.
Location or Impulse business – Your business needs to be based in a high-traffic area so it can take advantage of its visibility and convenience. Location based businesses should know about the high-traffic needed to be successful, and only consider locations that fit your criteria.
Bedroom Community – aka A Bedroom Suburb is a residential area, typically a town or suburb of a major urban center, where many commuters live. The name refers to the fact that commuters perform most professional and personal activities in other locations, maintaining their residence solely as a place to sleep. (In the UK it is known as a dormitory town.)
You should feel a level of comfort with the person you engage to be your Real Estate agent, and as your client/agent relationship grows, so should the level of trust between you. You should trust that your agent has your best interests in mind, and your agent should trust that you won’t circumvent them. One way to help cultivate this trust is to have a contract/agreement in place from the beginning.
Whether new acquaintance, friend or family member, an agreement helps to prevent any misunderstandings or hard feelings, throughout and at the end of the transaction or agreed upon time frame. It also specifies the agreed upon compensation and states what is expected of both parties.