7 minute read
10 Tips: Retail Real Estate Tip Sheet
by John Tiedt
Community leaders and economic development staff wear many hats, making it difficult to be an expert in every part of community development. This guide contains a cheat sheet for items to consider when attracting new retail, restaurant, grocery and hospitality businesses to your city.
Tip 1 – Know Your Trade Area And Perfect Your Elevator Pitch
• Be informed, know what your audience (e.g. tenant rep broker, retail executive, developer) wants and needs. • Understand that data starts the decision-making process, but the art of real estate and human input ultimately have the final say. Once you clear the demographic hurdle, it comes down to an array of real estate attributes and conditions that will ultimately determine if a retailer completes a deal or not. • Know who your market is today, as well as who you aspire to be. • Be concise with your outreach and present only the facts. • Learn how to master the five-minute phone call and two-line email.
Tip 2 – Understand Your Market Weaknesses And Deficiencies
• Look inward and heavily scrutinize your strengths and weaknesses. If your population is not exactly what it needs to be in order to recruit specific types of businesses, but you have a 10% growth rate and above-average household incomes, emphasize the strong growth rate and income. • Perform a Strengths, Weaknesses, Opportunities and
Threats (SWOT) analysis and be very critical. If you know where your weaknesses are you can put a plan together to fix those issues. If the crime rate is an issue in your community, ensure your city council is holding the right people accountable to execute a plan to decrease crime. • You cannot magically increase your population by 5,000 people overnight, but you can help make your market a place where a business sees potential.
Tip 3 – Target The Right Retailers
• In Tip 1, we talk about who you aspire to be as a community. Today a Dollar Tree might be a great retailer to enter your market, but you cannot make the jump from Dollar Tree to Target overnight. • Demographics are not the end all be all, but you must understand and define the “bracket” of retail where your market currently fits, and you need to build your base of any obvious retail that fits into your current market that may be missing.
Tip 4 – Reach Out To Retailers In Surrounding Markets For Relocation Opportunities
• It is not out of bounds to reach out to retailers in competing or neighboring markets and simply ask if they are happy with their location. Maybe they are in a lease dispute or have outgrown the physical limitations of their site. When a broker is canvassing an area for a lease assignment, it is common practice to reach out to tenants in the market to ensure they are happy in their current location.
• If you have the opportunity and ability as a municipality to purchase well-positioned properties to essentially land bank them, it is certainly one of the better ways to have some control over the future growth of your community. • My advice is to purchase this land at a fair value at the very most, try to break even on it when you sell, or, for the right project, use the land to help incentivize a deal.
Tip 6 – Define Incentives And Cut the Red Tape On Policies
• If you have a moratorium on drive-thrus, that will halt any deal with a Quick Service Restaurant (QSR) or some fast, casual restaurants given the need for drivethrus during the pandemic • Pitch in on infrastructure improvement and incentives – it helps! • Incentives do not have to be bags of cash. Sometimes all a development needs is for the city not to put up so much red tape to get in the path of progress. • Do not get in the way of progress. • Streamline your development and compliance regulations: • Come up with an A to Z development guideline for your community. • Do not have an over-the-top sign ordinance. • We are overstored in the U.S. and savvy retailers are right sizing their footprints. With construction costs soaring and rents staying relatively flat, the value-add proposition of rehabilitating existing buildings or shopping centers will be coming more and more into favor. • If there is a run-down shopping center in your market, see if the owner will sell the center. • Look for the “Higher and Best-Use Corner.” Think outside the box, not just about shiny new ground up development. Focus on well-positioned real estate assets within your community that have deferred maintenance and seem neglected. These properties could be key targets for investors to redevelop for a better tenant mix.
Tip 8 – Focus On Sustainable Retail And Mixes Of Use
• The future of retail development will be anchored by a variety of uses including medical, municipal facilities (e.g. City Hall), service-based users and community gathering places. • Consumer preferences have changed and indoor shopping no longer embraces those preferences. You want to focus on users and developments that will be sustainable and stand the test of time.
Tip 9 – Target Franchisees
• For franchised businesses, oftentimes the decision maker is the franchisee. Contacting the real estate director, tenant rep or franchise director is useful; but, consider going directly to the source and contacting the franchisee directly. This contact information is hard to come by and takes some work but often pays off. • Reach out to franchisees in neighboring markets. You never know when someone has outgrown their space or does not plan to renew a lease.
Tip 10 – Focus On Quality Of Life
• Understand what you can control and act on it. • Have a solid grasp on what people are saying about your community and do what you can to make it a great place to live.
• Make your city a place a small business owner would like to move their family and operate a business.
For additional resources on retail real estate and community advancement, visit https://www. retailstrategies.com/resources/.
John Tiedt is a business developer for Retail Strategies where he works with municipal leaders in Missouri to craft and execute retail recruitment and community development strategies.
Prior to Retail Strategies, John worked for GovDeals in several different roles, where he partnered with local governments to sell their surplus assets. His unique background with experience in both government and sales brings a refined approach and perspective to the business development team.
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