Your clients think they know what they want in a new location. You can help them by bringing up the questions they don’t know to ask.
Here are some ideas from Michica “Mish” Guillory, a Texas REALTORS® senior instructor and Broker at The Guillory Group Real Estate Firm.
How much space do they need?
Some clients fixate on a certain square footage without asking if that’s right for their business, Guillory says.
She asks her clients to imagine operating their business out of their home. “Do you really need your entire 2,000 square foot house for this barbershop?” she asks. “Then it gets to: ‘Well, I need just the living room, a bedroom, and the kitchen for it.’” By picturing a space they know well, your clients can better gauge their needs.
How much is their total budget?
Remember that the monthly rent is not your clients’ only expense. They cannot afford a $4,000 space on a $4,000 budget after other outlays.
How does their budget fluctuate?
Do your clients know how much their income changes throughout the year? Have they factored that into how they’ll pay their expenses year-round? An ice cream shop may be packed all summer long but nearly empty in winter and spring. Their plans—and base rent schedule—should reflect that.
Are their dreams included?
Your clients’ future business plans should be discussed during negotiations, Guillory says. It is easier to build in far-flung ideas before signing a lease than it is to amend a lease later. This even includes parking lot activities and special events.
If your clients dream of adding a bar and lounge area to their barbershop, include that in the lease use clause. Even if the expansion is related to the core business, it’s better to note that upfront.
Where are their customers?
Your clients need to be where their customers are. Any other consideration, such as a sentimental attachment to a particular neighborhood, must be carefully scrutinized, she says. Your clients may love a market with an older population, but their daycare business will do poorly there.
Are competitors welcome?
The landlord’s goal is to find the highest and best use for the property. You can help your clients by negotiating an exclusivity clause for the property in their lease. This stops a landlord from leasing the space next door to a competitor.
Pay attention to the terms of the negotiation, she warns. Say your burger restaurant clients agree to a lease that blocks any other restaurant whose menu is more than 40% burgers. Their business is in danger if their new neighbor’s most popular item is the one burger on their menu.
Where are their competitors?
According to Guillory, many businesses want to stay at least 3 miles away from any similar business. But specialization matters. She would not consider three pizza restaurants—a late-night venue selling by the slice, a trendy eatery focused on adventurous flavors, and a formal establishment with traditional recipes—to be competitors.
How you can help
As a REALTOR®, your member benefits include free access to REALTORS® Property Resource, says Guillory, Vice Chair of the Texas REALTORS® Member Benefits Committee. Guillory strongly recommends the powerful database, which can give you insights you can share with your clients.
She also encourages commercial practitioners to focus their attention. You can’t serve each of your clients to the highest level in every subcategory.
Seek out mentors and coaches. Educate yourself thoroughly, she adds. There are industry reports and data unique to certain categories that your clients may not know about. There’s specialized data, such as IMST reports for gas stations and STAR reports for hotels, Guillory says.
The more you know, the more you can help your clients.
