In some industries finding the right location for your business can really make or break that business. Learn how to find the right location for your business during this practical training lesson.Sign Up to Watch
[MUSIC PLAYING]alternative to lynda.com for real estate
-My name's Clay Clark and I'm the CEO ofT hrive15.com, an alternative to lynda.com. And today I am joined with Braxton Fears, the semi-retired commercial real estate guru who, at the age of 35, has been able to provide great business coaching and achieve a lot of things that most entrepreneurs never achieve. Financial freedom. The guy doesn't have a house payment. And he's going to be teaching us a little bit about commercial real estate and the importance of finding the right location for our business.
You always hear location, location, location. But how do we know if it's the right location, location, location? Today's episode might just turn out to be worth millions and millions of dollars to you in savings. Business coaching advice: Because if you choose the wrong location it can actually kill your business. Remember, at thrive15.com we believe that knowledge without application is meaningless. We believe that if you're watching today's training and you don't get something specifically out of it that you can apply in your own life and business it is an absolute waste of time. Albeit a fun use of a waste of your time. As you're watching today's episode, if you don't find something that you can specifically apply in your business, today's episode may just turn out to be more meaningless than getting a tattoo on the roof of your mouth.
-Rhyme, educating rhyme.
-All right. We're here with Braxton Fears. And we are discussing finding the right location for your business. The importance of location, location, location.
-We're going to get into it. It's going to be a fast-paced session. And just a little background, though. Braxton, you have represented I don't know how many deals. But you have been a commercial real estate guy for nearly a decade.
-At one point you controlled the commercial real estate listing for one third of downtown Tulsa. You've leased buildings that are former malls and for big companies like O'Reillys. I mean, you've done some big transactions. And so you know a lot about it. We're going to get into it here.
-So Braxton, the world of commercial real estate for business people, we always hear location, location, location.
-Yet when I meet entrepreneurs who have a business they have a bad location, bad location, bad location. So obviously there's a disconnect between location, location, location and bad location, bad location, bad location. So just to make things simple we're going to dive into the seven different types of commercial real estate that most businesses across the country tend to lease from. And we're going to go over the advantages and disadvantages of each in terms of choosing a location. So here we go.
-Industrial space. How easy is it to attract talent to come work for you when you office in an industrial space?
-Well obviously, it depends on the type of business that you have. But if you're looking to attract young professionals in an office environment, you don't want to be in a high volume industrial area with a bunch of metal buildings. But when you're trying to attract employees that are industrial workers, obviously for everyone the safety and for them to come to work in a nice environment, that's important for everyone. So even in an industrial building you want to have a building that's in an area that they feel comfortable leaving work at night and walking out and not getting mugged.
-Yeah So I would say the safety's big. The other thing I want to throw out is I've seen people that have embraced an industrial building that doesn't look that great on the outside. But they've kind of embraced this minimalistic, raw, loft-feel inside.
-And they've made spaces look great that were industrial. So some neat things to think about. Also here, Braxton, what's the advantage of leasing this type of property?
-Well the advantage of an industrial-type building is that it's cheaper. Business coaching tip: It's much, much cheaper to lease out of an industrial building. Some people, they find themselves in a building that's right on the road and they don't need it. They don't want walk-in traffic. They don't need walk-in traffic. But they don't realize, maybe, that they made a quick decision. And they don't realize they're paying sometimes quadruple what it would be in an industrial building off the road. In an area that is an industrial area, they could pay $5 a square foot per year rather than $20 a square foot per year.
-I want to hammer that home, though. I mean, literally you can cut your office lease expenses by nearly 80% a lot of times if you just go out there and look for an industrial space. It might be a good fit for you.
-The farther off the road it is, and in an area that isn't necessarily desirable for a retail building, the cheaper it's going to be for you, which is great business coaching advice.
-Misconception. The most common misconception about an industrial space. What is it?
-Most common is that it's only for manufacturing. It's only for cranes. It's only for big trucks coming in. Obviously that's for those businesses, as well. But if you're a small business owner-- you're an entrepreneur that owns a cheerleading place, or a gym, or things like that, where people will find you, some specialty-type thing-- you don't have to be in a retail space. You can find a cool industrial building that is much, much cheaper. And you can build it out it in a neat way for you, which is great business coaching advice.
-Now as we're talking about location, location, location we're moving on to property type number two, which is the office space. How easy is it to attract people when you have an office space?
-Well when you have an office space, if you have a nice A or B class building it's going to be much easier to attract employees. It's going to be easier to attract clients. Rather than if you have the office space that is back in a hidden area that nobody really has ever seen before. Or it could be kind of a sketchy area or the lighting's not good. Those are typically in a C class office building that you want to stay away from if you're trying to attract talent or clients. Here is some business coaching advice: Now if you have a call center or something that requires a cheaper lease rate, then that back office type-- we call it back office in the real estate business-- that would be better for
Are you looking or an
-So is there any business coaching advantage, in particular, to getting an office space? I mean, why would I want one?
-Yeah, the only reason that you would need one, other than having a home office or meeting people at Starbucks, is that you're kind of taking your business to the next level and you're trying to attract more talent. You're growing your business.
And I've said this in multiple other sessions, but we have steps that we want to take rather than leaps. And so you can go to kind of a shared office environment or an executive office environment where you can meet people in one room or a conference room with lots of common area, and then the next step would be to lease your own space for maybe three years or whatever. This is great business coaching advice.
-It might sound like kind of a weird point, but I have discovered that if you have a magnetic personality,
-I know entrepreneurs who are officed out of their apartment or their garage. Steve Jobs would come to mind, or the guys that started Hewlett Packard. They've officed out of a garage, but they had that kind that magnetic personality where they could get people to come work for them in the garage.
BRAXTON FEARS: Yeah.
-But if you don't, or if you are somebody who's a good guy but you just don't have that charisma factor, it's hard for a lot of people to have faith that you are a legitimate business and that they should actually coming to work for you if you're in your apartment, or if you're in your house.
For business coaching clarification, so having that office space is a great step to hammer home on what you said there.
-Now as far as the misconception of office space, is there any misconception that you see a lot people are like, well, I didn't know this is how that worked?
-Yeah, I think just the way that a lease is constructed, or a lease rate. An office space, when you do an office lease, all your bills are paid. So when you're looking at industrial or retail versus an office space, you think, wow, that rate is quite a bit higher than the other, and you just have to compare, they're apples to apples.
And in an industrial-type building or a retail office type space, you're going to pay probably $5 more per square foot per year then what the rates says. But when you're looking at an office building, that rate's going to include janitorial, the trash, property management, which is a great business coaching tip. They're going to come in and change your light bulbs for free if it goes out. It's going to include utilities, all that stuff that's not included in a retail and industrial lease. But in an office lease, it is included and it's called a full-service lease.
-That's why I've been trying to get my wife to move into an office space for years. The free light bulb changes, maintenance, trash service.
-Full service works for you.
-Beautiful. Now moving on to space type number three for location, location, location. Retail space. How easy how easy is it to attract customers when you're in a retail space?
-I mean this is probably the most important business coaching of the location segment that we're doing here.
CLAY CLARK: Yeah.
-If you're in a retail business, just moving in to any old retail space obviously doesn't work. This is common sense that you all know. It's something that you have to be more cognizant of than just if you're moving into an office building or an industrial building.
But it depends on the kind of business that you have. Here are some business coaching questions: How much are you charging? What kind of business do you have? Do you a boutique? Do you have a franchise? What is your business? And you cater to the demographic that your target market is. It's very important to find out what the target market and demographic in that area is is very important.
-I have found companies out there, and I know for you, it is common sense. I'm only challenging it because I know that for me, I see this all the time and I know you've done this for years and it's like you have it down to a science. I see people that sell a high-end product located in a bad part of town.
-And their good customers don't want to come to the bad part of town. Or I see people that have a business that doesn't even require a retail presence. They could be an industrial space and they're paying a premium for a retail. And really, I mean, the company will go out of business. There's a steak house right by my house that went out of business because they're in an overpriced location.
-So this could really make or break, and I think that common sense is really making sure that you can afford it.
-Right? I mean that's--
-Yeah, you want to make sure that it's just that right fit, that you're not in the ditch one way or the other.
-Now multi-family, this is a type of space here. I see a lot of business coaching owners, I've seen them do it. They have a home-based business, but they move into a duplex. Let's talk about the multi-family. How easy is it to attract people to come work for you if you took your investment money and you bought a duplex with your investment dollars and now that's your home office? How good of an idea is that?
-Yeah, it's not a great business coaching idea unless you absolutely have to, unless you're in the very beginning stages of your business and you're going, OK, I'm going to build myself up by meeting people at another location like a Starbucks or a Panera Bread until I get to the point where I can lease a space, because I do have to meet with people.
So obviously, if you have a home-based business, you're traveling all the time, I mean that's a different story. You don't necessarily need an office. You can work off your phone or your iPad, or whatever and wherever you live, that's your office.
But for the type of people that we're talking about now, a multi-family isn't necessarily good unless you have those certain scenarios.
-I only mention it because I've seen real entrepreneurs who have done it. And it's just sad when you see a man who took his life savings and he bought a condo in a duplex and now he's trying to make a business out of it. It's a tough spot. So you've got to focus on what your core businesses is.
Moving on to space number five, this is kind of that miscellaneous type of property. You see a lot of entrepreneurs who go, I'm going to invest in real estate. As so they go out there they buy a hotel, a really bad, beat-up hotel. Or they invest in a restaurant or raw land. Here are business coaching questions to reflect on: Again, what are the advantages and disadvantages of going out there and getting raw land, if you have a business? I mean, how is that an advantage or disadvantage?
-For some very mature companies that are wanting to build a custom building and that's what they want to do with their money, that's pretty rare. And for those of you that are on Thrive, you're probably at the point where you're like, OK, I'm not quite there yet. I'm growing my business, or I'm starting my business, and you want to stick with the lease because it gives you some flexibility and you can keep your capital and you can use it on your business.
-Now, the final two here we have is the super terrible L-shaped armpits style retail spaces that are perpetually empty because no one can find them on the side of the road businesses.
BRAXTON FEARS: Right.
-Why is that so bad and why do so many people choose those obscure, hard-to-find but high priced retail space?
-Yeah. I don't know why people that wouldn't need that or wouldn't find the advantage to that, why they would choose that. There's a lot of those older complexes that have that. And they're getting to the point now where they're leasing them for super cheap.
And unless you can find an advantage, where you need some minimal frontage, which those L-shaped places don't really have much frontage, but you need it to be fairly easy for people to find you. You don't want people walking upstairs, or whatever. There might be unique scenario where you can get something super cheap and get it very flexible, maybe get some build out from the landlord. Because the harder it is for them to lease it, the more they're going to give you. Business coaching tip: But in most cases, those places are something you want to run from.
-Now the final one, space type number seven, is that chronically vacant but overbuilt restaurant. It's the one where it's the big 10,000 square foot business. What's an advantage or I guess what's the disadvantage? Why do you see these things failing everywhere, these massive big restaurants?
-The massive big restaurant is just because that's the old model of restaurants. I mean, you look at what is growing in the restaurant business, the Chipotle-style fast, casual, healthy food. Those are like 3,000 square feet. Those are the ones that are succeeding right now. Keep this business coaching advice in mind.
And the huge steakhouse that used to be successful 10, 20 years ago, those are no longer making money. So that's why you see those. And eventually, they're going to have to completely reinvent those buildings or they're going to sit vacant. And lots of them, you're seeing that happen now.
-Well, Braxton, I appreciate you because I know that you do real estate transactions all the time, and a lot of these things are common sense for you. And I think it's amazing that you've kind of been able to distill that. And I would encourage every entrepreneur here, if you're just going, I have no idea where to get started with leasing space. We've got a lot more powerful trainings here with Braxton, who is great at business coaching. And I just, again, I appreciate your time in breaking it down.
-Thank you so much.
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