To lease or not to lease, that is the question! When you’re evaluating spaces, many business owners turn to established hotspots as locationswhere the market has already performed well.But how to find one that best suits your retail needs? See below for several factors to consider when you are seeking your next lease for a new venture.
Firstly, keep an eye on residential market conditions in order keep tabs on where future hotspots may spring up. As residential house prices increase or higher density living options spring up outside central business districts, increased patronage of an area will demand a higher demand for goods and services. This is especially the case if the nearest retail outlets are far away from a booming residential development or not accessible via multiple means. This may not be in an overly expensive area, but rather one primed for growth so be prepared to broaden your horizon as to where a hotspot maybe located. Be aware though, that opening a lone corner shop in a residential neighbourhood will not lead to the creation of a retail leasing hotspot, unless there is ample space for a series of retail outlets to congregate in a close by region.
Also related to the residential sector with implications for commercial property leases is a trend called PRS (private rented sector) or ‘build to rent’ housing market model. While it remains uncommon in the Australia context at present, eyes are on the UK’s investment in this type of housing which sees large developments maintained under single ownership instead of individual owners. Here, retail leasing has the potential to be more strategically organised whereby a landlord may consult or provide options for specific retail outlets that best suit their PRS project. The right vision and planning could lead to the swift creation of retail leasing hotspots to cater to large amount of residents in new or established areas as a result of increased residential property supply.
A rise of the cultural industries in an area is also a strong indicator of an emerging retail hotspot as the production of creative products and services gather individuals with disposable incomes to consume these commodities or sell them themselves. Location in this instance becomes of heightened significance and can drum up competition for leases as creative clusters emerge where people seek inspirational and suitable locations to network, create and sell. Co-working spaces are often a part of these creative clusters, so be on the lookout for those in more urban contexts which may indicate a retail hotspot that is rapidly emerging.
Another way to determine whether an area in a hotspot for retail is to simply investigate the average amount of days that commercially leased properties are on the market for. Multiple, empty stores may indicate a declining retail precinct or pending redevelopment of the area, so be sure to identify the contributing factors before prematurely ruling an area in or out of your search for a perfect retail lease. Also be wary the type of leases available, perhaps all the available leases offer properties too large, small or the wrong type of zone. So know what type of location will provide the best location for your business rather than simply migrating to a popular area, but a consideration of the general attractiveness of a precinct may also be relevant for your deliberations.
Finally, the best hotspots for retail success will have sufficient and convenient foot traffic, therefore assess the availability or parking or public transport so people can access your commercial business. If you are in a particularly busy location, a premises that offers rear parking is also a solid investment, but be prepared to pay more in rent to have this convenience. Such an investment will generally pay off, as some estimates suggest a further 20% in sales can be earnt when onsite parking’s an option for customers in popular areas.