Are you thinking about leasing your next commercial venture within an established retail precinct? There are some things to think about if you are starting out or have several businesses on the go already.
The following considers what to look for when leasing in a hotspot area and how best to assess which location is best before you buy commercial property.
Unless you have the capital built into your business strategy and are able to wait it out, select an area to lease for your retail outlet that will provide you with revenue in the short to medium term. Playing the long game and waiting for an area to take off and become a hotspot can be lucrative, but risky if you do not have the means to sustain this strategy while waiting for transport or other facilities to be built close by that will entice more customers to the precinct.
Therefore, be on the lookout for hotspots that already have known traffic whether it be on foot, via car or other transport. This will mean that customers are already in the area and you have increased opportunity to gain their business through brand awareness as people pass by your premises. To make the most of this strategy, it is a good idea to brainstorm the type of customer you will primarily deal with and how you anticipate they will access your business. If your product is the type that a customer will need time to browse and ask questions as a part of their buying experience, a premises next to a commuter train station may receive high amounts of foot traffic but of these many people, a majority will not wish to linger to peruse your products even if it is within a hotspot. However, this location may be perfectly suited to an outlet that more quickly dispenses products or services catering to this type of demographic, such as coffee or convenience food. So defining your target consumer and considering their habits and lifestyle can empower you to select a more appropriate location that can maximise your sales.
Once you have completed this exercise, it is also advisable that when scouting for locations within a hotspot, to determine whether or not it has easy access for your potential customers. Again, for some retail outlets this is less of a concern depending on the specifics of your business, but if you suspect the large majority of your client base would require parking for example, you may want to consider a lease with onsite parking, accessible off-street parking or ample on street spaces. If this is not a reality, you may want to consider a lease that is almost on the fringe of the hotspot where your customers can still find you amongst a vibrant retail bub, but are able to access you more easily.
Another tip when trying to decide which hotspot will potentially offer the most return on investment from your lease, is to investigate the level of office vacancies in the immediate area. A low vacancy rate normally implies that many corporate or public entities are conducting business in the area and will equate to more potential customers. In the same vein, if a precinct is busy and productive, occasional visitors or tourists may also be more inclined to linger in popular areas, provided they have amenities, hospitality options or other retail choices (enter your business!).
Finally, when leasing within a hotspot, investigate what other outlets are in the area. A glut of same-same retail offerings will run the risk of your business being drowned by similar products, while a completely out of character business may just not sit right within an area even if there are a lot of successful shops nearby. The key to this potential conundrum, therefore, is to strike a balance, either aligning with what exists already and knowing how you can do it better, or most consistently, or being ahead of the trend and providing a new retail experience that changes the consumer habits of the area.
Of course if your retail venture already has an established following or is of a superiorquality with equivalent price points to competitors and an assertive marketing strategy, this becomes less of an issue.However, for every store that has people lining up overnight to purchase their latest products, there are hundreds that do not have this type of following, so be waryof how your business may fall within a hierarchy in the area if there are many comparable offerings.
Ultimately, relying on leasing a premises in a hotspot as a major means to retail success has benefits and limitations, somaximise your returns but conducting in depth research in the area and correlate it your business to find a location that compliments your retail offering.