As a retailer, your premises are one of the most significant aspects of your business and one of the most costly. Retail businesses rely on accessibility to potential customers through foot traffic and ease of convenience. If you are thinking of opening a new retail location or a new retail business you should work through the below considerations.
Knowing where to open a retail store is a fine science. Firstly you need to know your business and what it has to offer, and then it is a matter of selecting the type of premises that best suits your operation. The Property Council of Australia provides a list of definitions for each type of shopping center available in Australia:
City Centre / CBD
These are retail premises within an arcade or mall development owned by a singular company, firm or person and promoted as an entity within a major Central Business District. Prime retailing in Australia comprises a diverse mixture of convenience, tourism, high-end fashion, cultural, civic and entertainment retailing. It reflects the vibrancy and diversity of a variety of customers that visit, live, and work in the city.
Super Regional Centres
A Super Regional center is a major shopping center; with two full line department stores, one or more full-line discount department stores, two supermarkets and around 250 or more specialty shops.
Major Regional Centres
A major shopping centre that has at least one full line department store, one or more full line discount department stores, one or more supermarkets and around 150 specialty shops.
A Regional Centre is a shopping centre with one full line department store, a full line discount department store, one or more supermarkets and around 100 or more specialty shops.
Sub Regional Centres
A medium-sized shopping centre; typically incorporating at least one full line discount department store, a major supermarket and approximately 40 or more specialty shops.
A local shopping center with one a supermarket and 35 specialty shops.
Bulky Goods Centres
A medium to large sized shopping centre dominated by bulky goods retailers (such as furniture, white goods and other home wares), occupying large areas to display merchandise. Typically contain a small number of specialty shops.
The retail rental market also incorporates:
Strip Shopping Precincts
Most neighborhoods in Australia have a high street or a strip shopping precinct such as Chapel Street in Melbourne and Oxford Street in Sydney. Strip shopping malls are great for business that supply facilities such as dry cleaners, key cutting, post offices as well as coffee shops, clothing, gift stores and specialty shops and are used by locals for the convenience and proximity to home. A management company often handles shopping precincts; they are charged with promoting the area, individual events relating to the precinct and the precinct itself providing seasonal promotions or attracting shopping tours to name a few.
Pop Up Shops
All of the above retail opportunities may offer short-term leases, typically for a fraction of the rent. These are referred to as pop up shops. A pop up shop allows businesses to try out a new market, a new product or test an idea without the excessive overheads and work required to set-up a normal retail shop.
Big Budget Blunders
Leases are the largest part of your budget so finding the right location must also come at the right price. Consider what your lease is actually worth. Will the location provide you with access to a larger amount of customers than another location that may be cheaper? Would being in a strip mall suit your business more than being in the CBD. Consider shopping centers and the customer traffic available from these self-contained buildings vs being in a location temporarily. One may be cheaper but the other would offer a larger array of customers and potential sales.
Scope Out the Competition
Retail is one of the few markets where being in close proximity to a competitor may be an advantage. Main highways that are lined with car yard after car yard, and high streets are full of wedding dress and fashion retailers. The advantage lies in convenience. Shoppers are more discerning than ever so having a related store in proximity to one another allows for convenience of cost comparisons as well as variety.
Finding an Agent
According to the Real Estate Institute of Australia, there are more than 64,000 Business Brokers, Property Managers, Real Estate Agents and Representatives working in Australia (2011 Census). Finding the right one can be like searching for a needle in a haystack. Most agencies will list some retail commercial properties but there are a few agencies that are specialists in the area:
The Big Guns
These agents are the biggest in the commercial retail rental game; they have multiple offices in each state and will cover all states and territories in Australia. Most of the big agents have an international presence, whether international companies own the real estate agents or they are reaching their Australian operations into other continents.
You will find some agencies are commercial leasing specialists and don’t work in the residential space at all. Some are specific to one state or local region only but typically are well known names with multiple branches. They are the specialists because the individual agents know the commercial market well and know the locations they are leasing inside and out. They have history with the local area and can provide you with expertise on the best spots and the background of the commercial rental market.
The Boutique Agencies
Some of the smaller agencies focus their attention on a small section of the retail market, whether focused on an area or a type of property i.e. exclusively leasing factories/warehouses or strip shopping malls or just retail properties in the inner east. Their main advantage is a focus on service, smaller agencies have the flexibility to move on rentals quickly as their listing may be small. To find agencies that specialise in retail properties in your area, visit our property search section.
Depending on the location, there are generally a lot of retail properties available for lease.
Always check the credentials of any agency you are working with, they should be members of corporate bodies. Conduct your own search by eyeballing the office and checking online to view the company websites for these credentials. Forums can give you an idea of the level of professional services provided by the agent you are seeking to engage as well.
The Real Estate Institute of Australia (REIA) is the peak body for the industry and are known as a credible source of knowledge and opinions for both the commercial and residential markets. They are not aligned with any political party and provide research advice to the federal government, opposition, professional members, media and the public on a range of property related issues. Being part of an industry body such as the REIA, or one of their state-level institutes, provides credibility and, in theory, assures a level of professionalism.