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-So now we're moving on to business coaching for retail. Property type number three. Retail properties can be everything from one of those small slivers of office space that's available for lease in, like, New York City, where it's just it's just this little shotgun space.
I got my hair cut in New York City at this great place called Prestige in New York City. And it literally was, like, the length of this studio, like, from that wall to that wall. From here to here. And that's pretty much what Prestige was. And I'm sure it was an obscene amount. Where also retail could be something like a mall.
So let's get into this here on this espiode that is an . There's tons of options for retail space. And I'm just going to kind of fire through them. And I want to get your business coaching take on them.
Neighborhood center. These are properties usually shaped like an L or a straight line. And I feel like every Walmart in America has one of these located right next to them.
-What's the business coaching or advantage of a neighborhood center?
-Well, it's for, typically, the smaller tenant wants to feed off of the large anchor tenant traffic. So that's why you see those in front of Walmarts or other big box stores, is that they're using the anchor traffic to get business. And it works well.
Now retail, again, it's more like the industrial lease. Business coaching sidenote: If you're going into retail and you look, hey, it's $20 a square foot, you've got to keep in mind that there's common area maintenance, and there's taxes, there's insurance for your square footage. You're going to get charged those fees after the fact. You're going to get charged those during the year, or maybe even once or twice a year.
And it's going to typically add up, with all of your utilities that you're also paying, all those extra things besides your base rent. It's not a full service lease. It is what's called a triple net lease. industrial and retail fall into triple net lease. And usually, that's going to be right around $5 a square foot tacked onto your base rent.
-So if I am in one of these neighborhood centers. Let's just say I'm located here, just kind of a visual. If Walmart's right here, neighborhood center is over here. And the theory is, the road is like this. People drive in to go to Walmart to get what they need.
And then, while they're there, they're like, oh, over here. This is a place where I can cut my hair. I should go to this place. And the bet is that there is going to be enough traffic do in that to make money.
-Yeah. Typically, it's specialty stores that offer things that Walmart does not offer.
-Now, what about a community center? These are properties that tend to feature a massive selection of retail goods. Generally, you find that supermarkets tend to be the largest anchor tenants here. What types of businesses should maybe consider being in more of a community centre where there's an anchor tenant of, like, a grocery store or something?
-Yeah, I mean, anything that the grocery store doesn't sell, there's not going to be a competing business in one of those. Business coaching tip: And typically, those shopping centers are set up in a way where they try to get tenants that don't compete against each other but that complement each other. And so you've got stuff like a GameStop, a gaming place. You've got Sprint dealerships, or cellphone type things. You've got other specialty things. It's very much like the neighborhood center.
-So, over here, you might have a grocery store. This is like, a little different from Walmart. But you have a grocery store over here. And over here, you might have that community center store, like a phone store right here.
-Yeah. There might be a restaurant in there as well.
-OK, so now, moving on, here, the next one is a free standing store. Sometimes these buildings are referred to as, maybe, a big box building. The idea behind this would be, like, maybe like a CVS, or a Walgreens, or something like that. What kind of businesses would you recommend leasing something like that?
-Well, like you said, if it's a standalone big building like that, you've got pharmacies. You've got auto part dealerships and those. There are smaller ones as well, that, sometimes a standalone building, if you're not needing to feed off of the big box store, but you're a specialty environment that doesn't have to have that, the people will find you, you can go into there.
-Now, the outlet center is another kind of building. And the outlet center, these two buildings are, typically, kind of touristy areas. They are kind of away from the community, where they've got manufacturers, outlets, who are offering discounts on products.
If I'm watching this, what kind of business would you recommend I might put out there. Have you ever, while business coaching, recommended somebody-- hey, you guys need to be out near the outlet stores? Anybody like that that would fit over there?
-That's pretty rare in whenever I'm dealing with people. That's pretty rare because, usually, those outlet stores have everyone set up. They pre-lease. You know, you've got your Gap, and your Polo, and your shoe store, your Cole Haan, or whatever.
-And they lease them all together?
-They are already set up to do that, yeah.
-OK. And for the record, I tend to buy five times as much stuff as I need, when it's 30% off. So I don't actually get ahead when I go
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-Regional center business coaching lesson. These properties and developments traditionally provide general merchandise activity and are commonly built as like, indoor malls. These would be like in Tulsa we have Woodland Hills Mall and maybe the city you're in, you have a mall there. But these are a regional shopping place where people come to these.
BRAXTON FEARS: Yeah.
-What kind of businesses? I see a lot of people that go in and out of business real fast when they move into a mall.
-What kind of business should be in the mall, and then what kind of business should not be an regional mall type center?
-Yeah, I mean, the mall is to attract a lot of people into one place. And you see normally the people that fail are the boutiques. They don't do so well in a regional center. They actually do much better in like a neighborhood mall somewhere, maybe an outdoor market where people walk around. Business coaching tip: The regional mall, typically the most successful people in there are regional-type tenants that have locations elsewhere.
-My buddy, Arthur Greeno, one of the Thrive mentors and investor in this project, he has a Chick-fil-A and he has a scalable business model, where he can just sell, sell, sell, sell, sell chicken. But the people, like you said, those boutiques, that maybe have these custom things, you've got to do such a high volume of transactions. Unless you're very, very, very scalable, you're going to really put yourself in a bad bind if you're in the mall.
BRAXTON FEARS: Right.
-Business coaching advice: So my thought would be, if you're not scalable, duplicatable, if you can't do what you do hundreds of times, over, and over, and over a day, I probably would not go to the mall.
BRAXTON FEARS: That's true. Yes.
-Now you move into the power center. Business coaching for the power center. This would be the building here that was actually built for Walmart.
CLAY CLARK: The building that was built just for Walmart, or just for--
BRAXTON FEARS: Lowe's, or Home Depot, or Best Buy and those type of things.
-And I see a ton of people that try to lease these. In Tulsa, we have one that's perpetually vacant. It leases up, it's empty, it leases up. But it doesn't matter what the company name is. They change the name all the time. And who would you give business coaching advice or recommend, I mean, if someone's was watching this, what kind of person would you say, that's perfect for you, man.
-Well, mostly those are custom built They are built for a Walmart or for a Best Buy. And you'll see them vacant after a while, after years. Maybe a Walmart did a 20 year lease and now they're vacant. And I haven't seen a whole lot of things be successful. We have a store here in Oklahoma called Atwood's and they go into old Walmart's and they seem to do fairly well. They're a discount hardware store and farm and market type.
-That's kind of their move though, is to go into a second-generation Walmart.
-That's their move and they do fairly well, but you know, if you're something like that, that might work. But in general, we've got some like DirecTV moves into an old Walmart, and that's a call center really, that they're dealing with inbound calls. That works. But for the most part, people struggle just trying to take over that, if you're a gym or something like that, that's not scalable.
-I've seen gyms lease and go out of business there. I've seen a ton of roller skating rinks go in and out of business. I think the thing is, if you're watching this, if you can get approved for a loan, it doesn't necessarily mean it's a good idea.
BRAXTON FEARS: Right.
-And so you just have to ask yourself. Again, you're in business for the purposes of making money, not just to get as big of a lease as possible.
-So be thinking about this. Just really be discerning when you-- and if I'm watching this and I'm going, this is great stuff. But gosh, I just don't know what the right property is for me, would you recommend somebody calls a broker?
-I do. When you're a tenant, it's good for you to call a broker, preferably somebody you know and preferably somebody that you trust who's got your back and they're not just looking for a commission. Business coaching hint: But broker or no broker, it's important to do your own research.
And also just remember, work with the mindset of steps and not leaps. And if you can figure out a way-- and we can get into this with some tips on how to keep your lease somewhat flexible. Brokers, and landlords, and banks, they want you to get into a long-term lease. And there are some things that you can do to keep it flexible so that you are not so bound, so that you can take steps rather than leaps.
-So some other things here, a couple other ones, there's a fashion specialty center. Many of these types of properties are located within higher-income populations. They're really popular, like, in New York. You have like the Sobo District there. They've got this beautiful-- it's the Soho District in New York. It's beautiful. It's a lot of high end fashion areas. In Tulsa we have a lot of these high-end fashion boutiques. It tends to be more expensive. They have a higher income population nearby.
-They tend to be smaller spaces, kind of a minimalist build out. They're very upscale, classy. What kind of business would you recommend that would move into that? Like what kind of business would you say, you my friend, need to be in one of these fashion specialty areas?
-Well, it's that business that we said probably is not going to do well in just a regional mall type of environment, but people are going to not buy from a chain store like a Gap, or a Limited, or an Abercrombie. Those are the places that people go to the mall for.
But if you're going to buy from a local boutique, you want to go to that place that has that reputation. It Tulsa, it's called Utica Square. It's a little bit higher per square foot, but it's worth it because people are going there intentionally for that. They're not going for the chain store.
-And from a strictly just financial business coaching perspective, if you do move into one of those places, you have to charge higher prices.
-I have several people that I know personally who moved into these upscale boutiques and have gone out of business, not because people didn't want their products, but you're paying a higher price. People all around you are used to paying a higher price, and they almost feel like your product's not that great if you don't value it.
Now moving on here into business coaching for strip centers. These are smaller developments that are located in higher-traffic parts of town and along main thoroughfares. You typically see like, nail salons, Subway shops, insurance agencies, dry cleaners.
Is there any other kind of businesses, in your mind, that should consider maybe moving into a strip center? Like, who would be one that you would say, you, my friend, need to be into a strip shopping center.
-Yeah, I mean, salons, the Subways, those kind of things are in strip centers, smaller lunch type of places. Phone dealerships. It's going to be very similar to that community center that goes near the Walmart.
-Now we have business coaching for this lifestyle center-- this is a new one here, I've started seeing this-- where you have a community where you'll have a building that's like a two-story sort of building here and amongst this two-story building, like underneath it, you'll have like a Starbucks on floor number one. And then next to this, there might even be a phone store over here. But then above it, it's like these apartments are above it. So people live up here and then there might be a gym underneath it.
BRAXTON FEARS: Yup.
-But the whole idea is that you actually would park somewhere back here, behind the building, if you even parked at all. And it's this lifestyle where you could live above the businesses and they're kind of regaining in popularity.
BRAXTON FEARS: Right.
-Las Colinas in Dallas, Texas area has begun doing this. In your business coaching mind, I mean, what kind of business would benefit from a lifestyle environment?
-Another name for this that's been used as a lifestyle center I'm hearing more of, but it's also been called a mixed-use building.
-Oh, mixed use.
-And so the things that you can-- you've seen these in New York for a long time because we've got the vertical building with these things down below, and this is becoming more and more popular, even in and median markets, just because it gives that feel.
It's the younger business person that lives there. Business coaching hint: So businesses that are like a gym, like you mentioned, or a Starbucks or a small grocer, really small, like maybe a natural market type grocer that would be down below would do well because it gears towards that younger crowd.
-I also think things that are high markup convenience driven.
-Because it seems like if you're in that lifestyle, a lot of the businesses that you see that do well are like CVS. You might pay more for a product, but you need it now and they do it quickly.
-Or a copy center. like, If you want copies or prints. I mean it's a high markup, high volume, those kind of items there.
-Moving on to the next one here this is the super terrible L-shaped armpit retail spaces that are perpetually empty because no one can see them from the roadside spaces, Braxton. You and I see these all the time.
BRAXTON FEARS: Yeah.
-Where we see a building that has no chance of ever being filled up. There's a place in Tulsa that is perpetually vacant. It blows my mind. But what we have here is you're going down the road, I won't mention what specific intersection, but you go down the road and over here is a business, and this business, it's right here, and over here is a business.
And then over here, you have a shopping center right here. And then-- and you know what I'm talking about-- then you have, what happens is this is all right here. Then back here for some reason these geniuses decided to build some sort of shopping center that's back here, somewhere off of Memorial, somewhere right around 51st, somewhere.
BRAXTON FEARS: Yeah.
-And it's always empty.
BRAXTON FEARS: Right
-And this right here is always empty.
BRAXTON FEARS: Yeah.
-And I hear people that say, I got a screaming good deal.
BRAXTON FEARS: Yeah.
-I got a good deal on this space right here that's behind-- because the road's right here and here. And they say, I got a good deal right here, this was a good value.
BRAXTON FEARS: Yeah.
-Why do people these back here, Braxton?
-Well, because either probably it was a mistake that they made or there are going to be times where there's a certain type of business that is probably going to be a back office kind of business that is just cheap and they don't need-- they did get a screaming deal and that's all they care about.
Business coaching advice: But those L-shaped retail spaces that you might be able to see or might not be able to see from the road, usually you see sketchy stuff, just because it's cheap. And unfortunately for the landlord, unless they reinvent that center somehow, it's always going to be that way.
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