Are you between tenants or stuck with empty retail space?
Recent trends in retail, such as the rise of e-commerce, have made it difficult for some brick and mortar businesses to remain profitable.
However, although the way consumers interact with retailers has changed, there are numerous retailers who have found ways of adapting to this new environment-and succeeding.
For example, although long-term creditworthy tenants are essential – particularly if you’re interested in a steady stream of reliable income – short-term tenants are a good option, particularly in well located areas.
In fact, short-term retail is a $8 billion industry that continues to grow an additional 16% each year, making it a lucrative business for both investors and businesses.
Consider Pop-Up Retailers
Pop-up stores originated in Japan, where customers would flock to a location selling limited editions and rare products. Once everything was sold, the store closed until new merchandise was received.
Stores selling seasonal products, such as Halloween costumes or Christmas decorations are a common site in many cities. In fact some businesses make a hefty profit by syndicating merchandise and opening up a chain of pop-up stores in several states that will only be open during the holidays.
But pop-up stores aren’t just for mom and pop businesses. Even large companies have embraced them as a way of launching new products, rewarding loyal customers, or trying out a new product line.
Pop up space has become so popular that it’s spread beyond the retail industry.
Substitute, “flexible short-term space” for “pop-up,” and it becomes easy to see that a wide variety of businesses can and do use flexible space. Training events, one-time exhibitions, sporting events, fundraisers, or farmer’s markets can all use your vacant retail space or parking lots.
Subdivide The Empty Retail Space
A large empty retail space subdivided into smaller sections might have a better chance of attracting small businesses who don’t need a lot of space.
Although you should still make sure to screen potential tenants for financial stability, it’s quite likely there are entrepreneurs who are just starting out and can easily afford a smaller space.
Signage agreements allow business owners to place signs on your commercial property for a fee. If your property is located in a prime area with significant traffic, this could be an ideal opportunity to reap profits.
Although you should check for zoning ordinances that may limit the amount and type of signage placed, it’s likely that some type of signage is allowed, particularly since the property has already been zoned for commercial use.
A signage agreement with the right billboard company could be worth hundreds of thousands of dollars, but if zoning laws severely limit your options, you might also consider offering space within your retail establishment, especially if it’s a mall. Zoning restrictions don’t apply to the inside of a building, which means you’re free to sell any frequently traversed area on the property.
Consider Less Conventional Tenants
If you own a shopping mall or other type of retail center, you might want to consider adding experience oriented businesses to your tenant roster.
Retail is changing, and many investors have found success by turning the local mall into a leisure or experience-oriented destination. Giving people a reason to come to a shopping center other than mere browsing – which they can do online – is one way to attract significant foot traffic.
Climbing walls, indoor golf, escape rooms, and virtual reality rooms are just some of the businesses popping up in malls around the country.
Don’t rule out outdoor space either.
If you have raw land or a large parking area, you might do well leasing space to go-cart courses, ATV or jeep rides, paintball facilities, or an outdoor shooting range.
If your commercial property has large amounts of unused parking space near major retail or office properties, you can rent that empty retail space for parking directly to car owners, or to private businesses searching for extra company parking space.
Surprisingly, parking spaces in large cities located in prime areas are quite lucrative: the average price for a single parking space running from $600 a month in New York.
And with the added bonus of almost no maintenance, steady income, and car owners who are happy to pay a full year in advance to ensure a parking space, this might remain an excellent method of adding extra income even after your commercial retail space is rented to your ideal tenant.
Obviously your ultimate goal is to find a long-term tenant that will happily renew. Using pop-up stores, however, will help you make back some of the money being lost while your property sits vacant, and will make your property seem more attractive to potential tenants.
And that’s a win-win situation all around.