You have reviewed your skills and talents and
found a “nitch” that can benefit other people.
This has inspired you to become an “Entrepreneur.”
Also ask yourself if you have the experience, exposure or contacts that
can provide basic retail traits.
Does your experience contain the following:
Real Estate & Construction
Employee Recruiting & Hiring
just a few of the areas you will become involved with as you proceed down the
path to opening your own business.
Location! Location! Location!
The most efficient method is to identify
where your customers live and where they currently shop.
Also evaluate the shopping center location within “X” distance you think your
customers are willing to commute.
Sometimes this distance and the customer profile representing your target
consumer will be in conflict. If
this happens you will have to expand your range or select another business. In some cases, relocation will have to be considered, if the
business is opened and struggling.
also recommends picking 4 to 5 different potential sites. This is suggested because many
times your desired space size may not be available within your desired
timeframe. You will also learn that each Developer
or Landlord has there own “sense of urgency” in responding to your request.
Contacting numerous Landlords will also allow you to compare rent quotes.
Demographics is a very important factor to the site process. Having demographics prepared on your potential site can give
you the population, household income, race and other information that will
assist in your location decision.
retailcriteria.com can help
you with this process which can be done with little information. All we need is the street address, city,
state and zip code of your site and the closest intersection.
Contacting the Landlord
If you cannot find the Landlord’s name in the phone
book, ask an existing tenant. If you are comfortable sharing a little
information, many existing tenants are very receptive to sharing information to
add a new retailer to their center.
As one of our services,
can provide you with a list of the centers in your respective area by just
giving us the county(ies) you are interested in. Our list of centers will include the
Landlord Address, City, State and
Center Address, City, State and Zip
Total Square Footage of Center
Major Anchors (if available)
Once the location is determined, the Landlord
or Representative of the center will prepare a written proposal.
The number of properties that are assigned to the Representative, will determine
the length of time before you receive the proposal. If the Landlord or Representative is assigned numerous properties,
he may just quote a number over the phone.
If the quoted price is much higher than other
properties you have contacted, the reason may be because vacancies in the trade
area are few in number. If this is not the case, counter the
price on the proposal.
retailcriteria.com has the ability to research your proposed
type of business and provide you with a summary of the typical occupancy
structure your kind of business can afford. We can also provide the average sales
volume for your chosen business based on the kind of shopping center location
you are targeting. These two
variables will allow you to “back in” to the maximum rent you should pay for the
desired space. For further explanation go to
Tenant Rent Formula.
After receiving a verbal or written proposal,
return your response within 3 to 5 days.
Do not respond the same day because this will send a signal you are too anxious. Also do not forget that you are competing with other current
tenants who may pay more than you are offering based on their profit margins.
Keep it realistic.
A realistic counter proposal is determined by
supply and demand. Is there an overabundance of new centers
opening in your prospective area?
Has the community prohibited new growth?
There is no blanket answer.
But the more Landlords you talk to, the better “feeling” you will have as to who
is chasing whom.
If your new location search is moving slower than expected,
remember the Landlord may not be the one that is being unreasonable.
This is because in almost every shopping center in America, regardless of the
size, there is always one or two tenants that are considered the ANCHORS. Maybe it is as small as a Starbucks or
as large as a Wal-Mart, but there is always at least one anchor. This is the tenant who received numerous
concessions as an inducement to locate where they did. Most small tenants want the “anchor”
concessions but the Landlord cannot afford to provide them to every tenant.
Remember to keep your expectations realistic.
Now that you have counter-offered, the
Landlord may be taking his time in returning the proposal to you.
He may be “shopping” your space to other prospective tenants or maybe he
perceives that you are trying to “low-ball” him.
Whatever the reason, be patient.
Remember if you had signed the original proposal you would be paying a
lot more rent for the next 5 to 10 years.
If the Landlord won’t concede to the
counter-offer, realize another potential tenant may have contacted the Landlord
for the same space. Maybe you need to reconsider how much
you really need the open points of the proposal versus the possibility of losing
the location. Here you must make
the decision to “hang tough” or give in.
Letter of Intent
The signed Letter of Intent states both
parties have reached an agreement and the lease will now be drafted.
The Letter of Intent does not signify the space is officially yours. Only when a hard copy of a fully
executed lease, signed by both parties, is placed in your hands, is the space
After the initial negotiations, your Landlord
may take up to 2 weeks to draft and send your lease. When you receive the
lease, read it carefully and we recommend you have a Real Estate Attorney review
it before execution.
retailcriteria.com does not provide legal services at this
time, but we do have Attorneys that will negotiate complete legal comments. When this process is completed, the
lease will be submitted to you for your review and signature. This offered service will be billed
directly to you by the attorney and normally does not exceed $3,000. Contact
retailcriteria.com for more information.
Once the final draft of the lease has been
sent to you for your signature, be responsive. Depending on the number of changes made,
the lease execution by the tenant should normally happen within 1 to 2 weeks. Remember, another tenant may approach
your Landlord while you are sitting on the lease.
estate expression “Time Kills Deals” is a very real statement.
The negotiations are completed, the lease is
tenant executed and returned to the Landlord.
You should receive the fully executed lease in 2 to 3 weeks depending on the
size and bureaucracy of the development company.
The length of time it will take for Landlord
construction depends on whether he/she invested any time prior to the lease
being executed. Since some tenants back away at the last
moment, some Landlords wait until the lease is fully executed before starting
their construction responsibilities.
Communicate with your Landlord throughout the lease execution and you
will have your answer.
Notice of Turnover
Upon completion of the Landlord construction,
you should receive a certified or registered letter.
This letter is called the “Notice of Turnover.”
It indicates the Landlord has completed his part of the construction and you may
begin your construction.
Before you sign the “Notice of Turnover”, you
should inspect the premises to confirm the Landlord fulfilled his construction
obligation according to the lease. With lease in hand, take a “walk
through” your store as if you were purchasing a home.
If you are not knowledgeable in this area, hire a professional
contractor. Make sure the
construction is completed as stated in the lease.
Accepting or rejecting turnover has numerous
ramifications. Accepting is always the most desirable way to go because now
all of the variables standing between you and your new store opening are within
your control. Sometimes Landlords
do not complete the work as they were required to do and now you must make a
choice. Evaluate the complexity and
expense of the unfinished items prior to rejecting the “Notice of Turnover.”
If the Landlord neglected to install handrails in the bathroom which cost less
than $50 and takes less than an hour to install,
retailcriteria.com would recommend signing the “Notice of Turnover.”
On the other hand, if the Landlord did not install the ceiling, with cost
exceeding $1,000, then a more formal rejection letter is necessary.
It is up to you on how “picky” you want to be. Remember - rejecting turnover will delay your opening.
Rejection and Accepting turnover letters are
Rejection Turnover Letter
Accepted Turnover Letter
Rent Commencement Date
If the space is accepted, a “Notice of
Turnover” will be signed and returned to the Landlord.
At this time your rent commencement date will be established which indicates
when you will start paying rent on your space.
Unfortunately some Landlords will generate a Turnover Letter while their
contractors are still working in your space.
In this case, the Landlord will actually be accelerating your rent start
date without you responding.
To ensure you have enough time to complete
your construction, begin the process of construction when the Letter of Intent
is signed. The following list contains some of the items that need to be
completed before you start construction:
Bids for Construction
Preparing of Store Blueprints
Placing Ads for Employees
Identifying where and how you will advertise your grand opening.
To determine tenant construction time, try to
allow 1 to 2 weeks per every $10,000 you expect to spend on construction.
Add 2 to 3 weeks after the contractors finish for employees to stock the
store and complete the displays.
If you are experienced in organization and
planning, you may be lucky to have “Free Rent” for a few days.
For example: If Rent Commencement Date is 60 days after Notice of Turnover, but
you complete your construction, open your store and generate sales in 55 days,
you will receive 5 days of free rent.
This free rent “bonus” is based on lease wording.
Commencement Date will be noted in the lease. Landlords will frequently try to mandate a specific date in
the lease for your rent commencement.
This should be avoided. You should
try to tie the rent commencement date to “X” number of days after turnover. There are two widely accepted sentences
to address this issue. The lease
This sentence indicates that there will be no
“The rent commencement date will be “60”
days after turnover or when Tenant opens for business whichever comes
This sentence indicates there will be “free rent”, but only if you open
within 60 days of accepting turnover.
"The rent commencement date will be "60" days
after turnover regardless of when the Tenant opens for business."
The number 60 used above is subject to negotiation.
It could be 30 or 120 for example.
The day has arrived.
The store is completed, employees hired, shelves are stocked and you're ready
for business. The long process is completed and
you are your own boss. But what
about the Entrepreneur’s store that isn’t ready by “Rent Commencement Date?” Unfortunately, this is the worst
situation to be in. If you see that
your store is not going to be ready, try to motivate contractors with overtime
incentives, etc. There is nothing
worse than having to pay rent while not generating sales.
We hope you have found this overview
We welcome your feedback and look forward to expanding this website to
provide additional services in the future.