Five points for retail site development success

16th Sep, 2020

If you’re in retail and expanding your portfolio of locations, you’ve undoubtedly found that the process is both exciting and daunting. For startups and small businesses, you’re probably doing double-duty as project manager, designer and leasing expert-all while trying to maintain your core product and service offerings to your customers. In larger organizations, where you have teams of folks to manage the varied (and often diametrically opposed) metrics of site selection, store planning and construction, you’re probably also strapped with ensuring team alignment and cumbersome change approvals processes. In either of these scenarios, deadlines and budget are likely both motivator and jailor-so here are five things that I’ve found to be helpful at keeping the panics to a minimum:

Commission a survey of your lease area; if your business involves a drive through or significant exterior customer experience, make sure that this survey also includes those parameters. You’ll want to completely understand how your loading will work, how trash is handled, parking restrictions and what you’re facing in terms of signage. Have the survey team put themselves in your customers’ shoes: make the trek from the site gateway all the way through the lease area. Then ask them to do the same thing through the eyes of your store employees.

Ensure that proper Use and Zoning is in place. I once worked on a project where we were rushing to get the store open in an extreme rush to block our competitor from gaining entry into the marketplace. As the story goes with Karma, we found ourselves in a situation where we’d completed hours and hours of rush design and survey work, only to find out that the existing zoning Use on the site was incompatible with our proposed development—effectively killing our deal due to the months it would take to go through the change process at the city. It’s a little thing that’s often overlooked (especially if your prior tenants didn’t pull building permits), but can have a major impact on your timelines.

Demolish any to-be-removed areas of the lease area before you award the new construction work. Of course time doesn’t always allow for such a luxury, but taking this step helps you avoid surprises. Working on a project in downtown Toronto, we discovered an old bank vault wall section inside what was assumed to be just a simple concrete block wall. It didn’t show up on any of the historic plans for the building, nor did the landlord know about it. But it took three weeks of torching and drilling to remove—and at a significantly unbudgeted expense.

Negotiate the big stuff into your Lease. Often landlords will offer some sort of tenant improvement allowance (TIA) as a part of the lease terms, or take on some building work themselves. Where possible, moving major items to the landlord’s work makes sense—even at increased rent—due to the mitigation of risk of these elements for the tenant. Jeff Thomas, managing partner and broker at Ashlar Urban Realty, suggests an honest disclosure of your intentions: “when landlords understand the [TIA] money is being invested in their real estate, they are more likely to approach the deal as a partnership.” Jeff also points out that both cost and time savings should be considered in how these negotiations are approached, as it’s often pretty easy for a builder to deliver major items as a part of their scope if they have the plans in advance of their efforts on site.

Speed is important, but be pennywise. In retail we’re often challenged with the “must open” dates or impossible deliverables to meet an ever-evolving set of expectations or customer needs. But, unlike most other areas within retail, the decisions you make during the store development phase are often ones to which you’re married for the next 5-10 years. So, before you decide to go with that cheaper flooring, halogen lamps or compromised layout, ask yourself: will going this route cost me more in maintenance or operational costs for the life of my lease?

Ensuring the above will save a lot of frustration, time and capital. So will enlisting Space Craft: we’ve now opened over 300 retail locations and are always happy to help you grow your store portfolio.

- Don Clark, managing principal, Space Craft Inc.