Mastering Retail Leasing: Insights from a Senior Industry Leader
With over 20 years of experience in retail leasing, Ken Bernstein serves as Vice President of Retail Leasing at David S. Brown Enterprises, Ltd. In his role, Ken oversees the retail leasing operations across the company’s diverse portfolio. He is dedicated to helping entrepreneurs and business owners secure the ideal locations to grow their businesses, offering expert guidance on leasing strategies and market conditions. Known for his approachable leadership, Ken combines smart business insight with a client-focused approach. Outside of work, he enjoys exploring Baltimore and cheering on the Ravens.
How can retailers adapt their spaces to changing market conditions and customer preferences?
Retailers need to stay flexible and ready to adapt quickly to changing market conditions and the latest trends to stay ahead. Incorporating digital experiences such as interactive displays and mobile payment solutions also enhances customer engagement. Additionally, retailers should continuously collect customer feedback to understand evolving preferences and make data-driven decisions for store adjustments. Creating a tailored shopping environment is key to staying competitive.
What advice would you give to new retailers entering the market for the first time?
New retailers should start by thoroughly understanding their target audience and their needs. A solid business plan that includes a clear strategy is vital. They should also research the local market, competition, and customer foot traffic in potential locations. It’s important to have a minimum of one year’s worth of rent and expenses in the bank upon opening. New retailers should focus on learning from past business challenges in the market, using these insights to identify opportunities and craft strategies for success. Building strong relationships with landlords and neighboring businesses can also provide valuable support in the early stages.
How can retailers make the most of seasonal leasing opportunities?
Seasonal leases provide excellent opportunities to test new markets or products without long-term commitments. To maximize these opportunities, retailers should focus on strong visual merchandising, targeted marketing campaigns, and boosting foot traffic through event-driven promotions. Planning inventory carefully to align with the season and using pop-up formats can also create urgency and exclusivity, driving higher sales. Finally, retailers should track performance metrics to evaluate whether extending the lease or revisiting the space in the future is worthwhile.
What are the key factors to consider when choosing a retail space?
Location is the most critical factor—proximity to target customers, foot traffic, and visibility can substantially impact success. Retailers should also consider the size and layout of the space, ensuring it suits their operational needs. Evaluating lease terms, including rent, duration, and potential increases, is essential for financial planning. Additionally, analyzing the competition in the area and understanding the local demographics will help ensure that the retail space aligns with the retailer’s target market and business goals.
How can a retail business owner evaluate the financial viability of a lease?
Retailers should begin by evaluating the total cost of occupancy, including base rent, common area maintenance (CAM) fees, taxes, and insurance. They should compare these costs to projected sales to determine whether the location will generate sufficient revenue to cover expenses. Additionally, understanding the lease structure—whether it’s a gross lease, net lease, or percentage rent—will help predict future expenses. It’s important to consider both the upfront costs (like build-out expenses) and long-term profitability, factoring in customer traffic and sales growth potential.
What are the benefits of leasing a retail space in a shopping center versus a standalone location?
Leasing in a shopping center provides higher foot traffic due to established anchor stores, diverse consumer demographics, and marketing support from the shopping center itself. Centers also offer shared amenities and a more controlled environment. However, rent in malls is typically higher, and there may be restrictive leasing terms. Standalone locations offer more control over branding and store layout, and less competition for foot traffic, but may need more effort and investment in marketing to attract customers.
How can retailers ensure they are compliant with zoning laws and regulations?
Retailers should start by working with a zoning attorney or a real estate agent to understand local zoning laws, as they vary by city and district. Before signing a lease, validate that the property is zoned for retail use and inquire about any specific restrictions regarding signage, hours of operation, or types of business activity. It’s also important to check for any required permits, such as health or safety permits, and to ensure compliance with accessibility standards, such as the Americans with Disabilities Act (ADA).
What are the pros and cons of short-term versus long-term retail leases?
Short-term leases offer flexibility, allowing retailers to adapt quickly to market changes without long-term obligations. They are ideal for seasonal or pop-up stores but often come with higher monthly rates and less security in terms of lease renewal. Long-term leases provide stability, predictable costs, and often better financial terms, but they also lock retailers into agreements that may not suit future market conditions or business needs, or relocation options.
