LocalCenters.com

Top 25 Expanding Retailers for 2010-2011

LC — Fri, 14 May 2010 16:44:45 PDT

Top 25 Expanding Retailers 2010-2011 Source: Retail Lease Trac and RBC Capital Markets via Retail Traffic Mag.com

With a proposed rollout of approximately 2,000 stores, Quizno’s leads the pack, followed by Dollar General who’s looking to open 1,200 stores, and value gym Anytime Fitness, proposing 800 new stores in the next 24 months.

For the first time in more than a year, the number of planned openings in the next 24 months has increased.

According to the article in Retail Traffic Magazine the expansion figures are down slightly from October 2008 numbers, but show a slight increase over December 2009 expansion reports.

For more detailed information on Quizno’s unique re-opening and expansions plans, see our series of articles in the Examiner.com

How to be #1 in your city

LC — Wed, 12 May 2010 23:31:26 PDT

Being “the best of” or “number one” in your category in your city will generate more sales for retail tenants than almost any other type of advertising, and it is 100% free

Increase your sales by being #1

Local retail tenants do not have the advertising budget of the chains, so we must become creative and mine out freebies and low-cost promotion. Localcenters.com is a believer in social marketing because it’s very low cost to no cost, and it can be more effective than conventional media.

Most cities with a daily newspaper and local television have at least one “best of” list every year, and the voting is often done on the internet. With a little effort, you can use your social media contacts in Facebook, Linkedin, and Twitter and your email list that you’ve been building to reach that coveted top position.

Call for action through email and social media

Unless your business has been established and is an acknowledged leader, you need to “ask for the order.” That means emailing friends and business associates and asking them to vote for you. In your note or post, explain that you know it’s a huge favor, and their support is entirely appreciated and special. Then, give complete instructions and links on how to vote for you.

The more active you have been with social media, the more likely the votes will be forthcoming. Here are some things you should be doing now:

Creating and working a Facebook “like” or “fan” page
Using Twitter for valuable tips about your business
Attending networking meetings
Engaging your customers with “thank you” specials and new ones with irresistible offers.

Here’s a good example. In our city, there is a TV station that sponsors the “KCRA-”A” List” which includes practically every conceivable category. This evening I received an email from a woman I have met once or twice, asking me for my vote. I’d probably never use her service (facials), but her message and call to action was so compelling I’d have felt guilty not voting for her.

There are probably 500 facial operators in our area. Carol Dyer of Skin Care by Carol is not the biggest, nor is she the best known, but no one promotes more than she in social media! When I went to vote, I was shocked to see the current rankings; Skin Care by Carol is the current #1 A-List choice for facials in the Sacramento region! How does Carol do it? By Facebooking, Tweeting, networking formally and informally, and taking advantage of every free or low cost opportunity to promote her business. By doing these things, Carol is building a brand at practically no expense.

Go find a contest, put out the word to your contacts, and you too can be #1.

Strip Malls: Develop new or buy existing?

LC — Tue, 04 May 2010 20:51:59 PDT

Is it better to buy old run down strip centers instead of building? writes Candy from Texas, via Ask The Strip Mall Insider

As I told Candy in an email where we discussed the specifics, I’ve always been a believer in vertical construction. The financing has been easier, everything is new, and we know tenants generally prefer new buildings to old, unless there’s some character in the architecture. In California, we don’t see much of that!

Today the entire paradigm has changed due to the inability to finance most any non-residential real estate, and the growing supply of bank-owned properties. Although we were somewhat prolific in the last decade with strip mall development, I doubt I’ll develop anything for the next 3-5 years. Simply, there’s just much inventory coming available, often at below replacement cost, to justify the additional expense of new construction.

As a result, rents will stay low for awhile. Until our supply finds some equilibrium with demand, I strongly recommend you stick with existing buildings as your end price will allow you to be much more competitive in rents than if you were to build new. I wish you the best, Candy, and thanks for writing The Strip Mall Insider.

Building Codes Do Not Insure Quality Construction

LC — Tue, 04 May 2010 16:50:01 PDT

A local building department reviews a plan submittal. The plan is eventually approved and construction can begin. Does compliance with a building code mean a guaranteed level of quality during construction?

Not necessarily.

To see why, it is helpful to understand that a code is a minimum set of construction requirements primarily designed to address life/safety, accessibility, energy efficiency and other concerns the public sees as necessary for their collective well-being. To use the example of a roof, codes only specify it protect a building (structure) from water. This is a performance requirement. They do not specify on how this is to be accomplished. In contrast is an issue directly affecting life/safety, let’s say the roof’s sheathings, which must satisfy more stringent minimum requirements for sheathing material, nailing, spacing, etc. So while a leaky roof may eventually violate code performance requirements, it has not violated any prescriptive requirements (since there are none). The task remains, to provide a set of specific standards detailing how a roof membrane is to be constructed.

Those procedures and standards can be summed into three groups:

certification reports
industry group standards
individual manufacturer’s recommendations

The first is sometimes used in conjunction with permit drawings, to explain alternate methods of complying with code regulations. Most common are U/L certifications, ICC reports, and other independent testing laboratory agencies and evaluations. The second would include trade groups such as the SMA (Stucco Manufacturer’s Association), APA (The Engineered Woods Association) or the MFMA (Metal Framing Manufacturer’s Association). The third are installation and maintenance procedures a manufacturer (say USG) publishes that best insure a building product will perform as claimed. Within the last two groups, reports can account for regional differences requiring modifications to a more general protocol.

Again some of the above are part of an approval process and are tied to a section of code mandating a performance or as substitute for a prescriptive qualification – but many are not. For those, construction documents prepared by a skilled designer, fill many of the gaps between a performance mandated by code and the long term viability of a construction.

In conjunction with the knowledge and workmanship of the general contractor, these standards can go beyond requirements of a building code, to make a more trouble free building, a reality.

By Ernie Moore, AIA

Population density and impressions determine sales in strip malls

LC — Fri, 16 Apr 2010 15:08:05 PDT

Strip mall sales volumes are usually closely tied to traffic counts and population density. Sometimes being a block off the action isn’t good enough. The answer to this question from Lino in Chile applies universally.

LINO ALFARO wrote: Hi, I got a location and I want to develop a Strip Mall in CHILE. Its 1 block,426 ft Long Avenue front, but not the main Avenue that is narrow than this. This Av. serves as a connection on main Aves. Great visibility, 70 parking spaces, grass, 2 story building. One of the possible good tenants told me that he prefers the busy avenue. But they are from other city, as a local I can tell that busy Av. is a crowded one so you lose time trying to move there, so if i get destiny traffic this could be a nice area to do business close to busy crazy slow traffic. Is there a Study about nice Avenues alternative to bussy ones that i can read somewhere? Thanks I appreciate your help.

Lino this is a great topic, and after several studies there’s an easy answer. Several years ago, Randalls, a Safeway company, built a store in South Chicago. The average household income was $16,000 per year, i.e. very low. The store was surrounded by subsidized housing, and the area was crime-ridden. No other store would consider the area due to these negative factors. What Randalls saw was a density of nearly 150,000 potential customers within one mile. Granted most of them were on food stamps, but they still had to eat. Within two years it was one of the highest volume stores in the chain, and in all of Chicago. The fact is, Lino, that our business is based on conversions from potential buyers. If you were a merchant, you’d prefer to have 20,000 people driving or walking by each day than 10,000, because even though their location on the less busy street might be more convenient, they just don’t have a chance to lure in as many people. Consider building a more economical building, and targeting destination, rather than convenience tenants. LC The Strip Mall Insider

Anchored Center vs. Strip Mall

LC — Sat, 01 Mar 2008 21:31:56 PST

Tenants like anchored malls because they’re told they are better. That’s not always the case, because other factors such as exposure, ingress and egress, and intersection positioning are critical for convenience tenants. Read how we helped this fast food franchisee make a decision.
ripsy asks…I’m a franchisee of a top sandwich food chain who has an opportunity to build out a new store on a busy intersection. Here’s my problem…I have the option to choose between one of two centers that are being built on the intersection.

In Center 1, Ican get into an endcap not on the hard corner but on a pad 50 yards or so from the light. Visibility is excellent as is parking. It is a small sized center and is anchored by a CVS/Pharmacy store and Jack in the Box Drive thru. Occupancy is around 50% currently (with more tenants
promised)
Center two is a larger center anchored by a grocery chain as well as Starbucks, Carl’s Jr. Dental office, Bank, clothing store, etc. The problem is that my location is inline (4th in a pad of 6 spaces). Visibility is very poor, the Starbucks pad and a Carl’s Jr drive thru are in front of my pad and it cannot really be seen easily from the main street. LL has offered space on the monument sign for a fee of course. In front of the space offered there are 2 disability parking spaces. In general parking is very poor for my location.

Assuming Rent and CAM are similar for both locations…what is the optimum location for me to get into?
I know Center 1 is smaller and not anchored by a major, but I get a great location endcap on main street with great access and parking. Center 2 is much larger with more draw and daily traffic, however visibility and parking is very poor.
PLEASE HELP!

Ripsy, you’ve come to the right place and I’ve got your answer;-)

Now remember, I have a bias as I’m a strip mall developer, and we only have one anchored center. BUT, this site is about you, not I, and I think I can be objective. I like to list a rank order of preferred locations for convenience tenants, and your sandwich shop is a classic example. Here would be my choices as a tenant:

First Choice: Hard corner, endcap, anchored (assuming great exposure)
Second Choice: Hard corner, endcap, unanchored, (assuming great exposure)
Third Choice: Inline, anchored with great exposure
Fourth Choice: Inline strip mall, with great exposure
Fifth Choice: Inline anchored with marginal exposure

Sixth Choice: You were expecting inline strip mall with marginal exposure, right? Wrong. That is NOT an option. Strip malls work because of the 100% street exposure. Without an anchor to draw the customers in, poor exposure in a strip mall should be a pass for both tenant and developer.

Ripsy, you’re in a numbers game, and I don’t care how people see you as long as they DO see you. I favor big traffic numbers over small slow drive bys or walk bys, because even though you get a better kill rate with those, the numbers are often too small. If you have a traffic count of at least 30,000 cpd going by your strip mall, and I’m sure you do with Jack and CVS there, you have numbers on your side.

As Professor of Marketing at CSUS years ago, I used to tell my students that they were subjected to 40,000 impressions daily, and it was up to them as marketers to be a part of that and to stand out. Imagine the number today. Why keep your store a secret in center 2? I’m going for the proven concept, Ripsy, and that’s Center #1. Good luck and let is know what you decide.

Your comments in agreement or disagreement are welcome!

How to Find Strip Mall Owners

LC — Sat, 01 Mar 2008 21:39:41 PST

Michelle Russell writes:
Hello,
I’m looking for a directory that contains strip mall, shopping center, ect and storage unit owners names and contact information. Do you know where I can find that information?

Michelle, there are a few ways to assemble some of the contact you’re seeking.

Strip Mall Owners: TOUGH, as there are so many of them in any given area. The easiest way is to designate a geographic area and ask a friendly title company rep to give you a printout of the parcel ownership. If you have a larger area, you should probably be thinking about a data provider subscription, like CoStar.

If you wish to establish yourself as a retail expert, a membership in the International Council of Shopping Centers is always a good investment for both education and contacts. The downside is that many of the members own and lease larger centers and strip malls aren’t usually the main focus. Why do you think I started localcenters.com??

Mini-Storage Contacts:

Hands down, get in touch with the Self Storage Association. They are a very active and organized group, and most mini storage owners who have any kind of property belong to them. They have conventions and regional meet ups too. If you want to get to the smaller owners, call ‘em! Often the number on the sign will get you there. Hope this helps a little, Michelle.

Note to you entrepreneurs! Directories for Strip Malls and Mini Storage are ALWAYS Being Requested!

Can My Landlord Kick Me Out for a Better Deal?

LC — Sat, 01 Mar 2008 21:08:54 PST

Jennifer asks…
Have you ever come across a strip mall landlord trying to force out the tenants in order to be able to sell the land and rebuild a Walmart type store? Can a tenant have a long term lease for say 25 years? And if so, what would be some of their tactics be?

Jennifer, the ability of the landlord to do that is totally dependent upon the lease terms. For example, if you have a 5 year lease with a 5 year option to renew and you exercise your option, you have a lease. Not only do you have a lease, but normally any buyers are “stuck with you.” Here’s the language from my lease:

35-6. Successor and Assigns. The covenants and conditions herein contained, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of the parties hereto.

Now, if I am a landlord and Wal-Mart want to make a favorable deal with me, here’s what I might do to get you to leave:

Attempt to default you on any permissable grounds, like being one day late on the rent. Depending upon your jurisdiction, I may or may not be successful. In California, the judge would look at my tactics as not acting in good faith. In Texas, he might very well find for the landlord.

Offer a buyout
Offer a relocation to another center for the same or better terms

You asked about a 25 year lease. Are you thinking of becoming a “spoiler” Jennifer? That would put you in a very strong position. For a strip mall, however, it’s unlikey that you’ll get a 25 year lease, more likely 5 to 10 years with some options to renew on conditions, for either term.

Strip Mall Maintenance Costs

LC — Sat, 01 Mar 2008 19:09:27 PST

Homer from Oklahoma wrote:

What is the average cost to maintain a strip mall (each year over a five year period)? What is the typical agreement between the leasee and the leasor ( in terms of: who is responsible for what when something breaks down)? What is the average rent paid for a space in an average sized strip mall?

This is a multi-part question and harder to answer than you may think. Let’s break them down:

Average Rent: The averaged stabilized rent (after free rent and when the tenants have been operating for two eyars or so) for a strip mall depends on several factors, among which are:

Geographic location and market
- Guaran-friggen-tee-ya that California is higher than Oklahoma!
Location within the market
- Translates into sales potential
Market conditions
- We’ve been hit hard here in Northern California, so our rents are generally stable to down from 2007. In Seattle, they’re up
What matters more than anything else, Homer, is the sales potential. No matter where the retailer is located in the country, the margins are about the same. A sit down restaurant, for example, needs to have a rent factor about 12% of gross sales. So, depending on the average sales in the area, the stabilized rent could be between $18 and $48, with $24 a good medium market figure (but higher in California generally).

Landlord and Tenant Responsibility: This is totally dependent on the lease document. Here are some variants:

Absolute Net Lease: Tenant does everything including grounds maintenance. These are typically free standing, single tenant buildings.

Triple Net Lease, Shopping Center: This is the norm for most strip malls 30 years old or newer. The tenant pays his proportionate share of real estate taxes, common area insurance, and maintenance. The landlord takes care of the maintenance and bills the tenant back in the triple net or CAM (Common Area Maintenance) charges.

Modified Gross Lease: The CAM above is included in the rent, and the tenant pays the increases each year.

Average Annual Maintenance Costs: Impossible to answer without knowing the age, condition, and climate. If there’s snow removal or security, that really adds some cost. In our new strip malls we might spend $6,000 a year for the first five years, and that includes landscaping and general maintenance. In a 20 year old building we might have to start replacing air conditioning at $1,500 per ton, or $6,000 per unit, average. Add painting, roofing, parking lot maintenance and the costs which go back to the CAM can easily be four times that of a new center.

Pick Up Stix Closes 26 Stores Without Notice

LC — Wed, 16 Jan 2008 13:46:31 PST

Pick Up Stix, a San Clemente,CA based chain of fast casual Asian restaurants, has shuttered 26 stores in Northern California, Nevada, and Arizona as of January 15, 2008. Apparently there was no notice given to the local employees, according to the buzz on Elk Grove, CA based Elk Grove Online (requires registration).