Advice on Finding a Retail Space

I am one of the former co-owners of Flicka Boutique on Fillmore Street in San Francisco. We opened our boutique in 2004 and at the time it was quite difficult to find a space. We decided to use a few different brokers to make sure that we saw all the available properties in our target neighborhoods and once we determined the one neighborhood we were interested in, we worked exclusively with one broker.

In retrospect I would have done more research to make sure he was really the best one in that area. We discovered later that there was another broker who really "owned" the street and it would have been much more beneficial for us to have worked with her from the start. Our broker really had to "pound the pavement" to try and find spaces for us because he didn't have the relationships with the landlords to know the "inside scoop". We ended up finding our space through a friend, but we would have found it sooner had we worked with the more knowledgeable broker.

Once we honed in on a space, we thought it would be relatively easy to secure the lease, but that was not the case. The landlord refused to meet with us, which made it very hard to sell our concept and convince her that we were the right tenants. Luckily we had a pretty detailed presentation that we presented to the landlord's broker and in the end she chose us because she liked our idea. Unfortunately we had to wait almost 3 months for her decision, which was definitely very nerve racking since we didn't have any other options. I would recommend finding more than one space that will work for you because you never know if the landlord will choose you.

I don't remember there being any major issues with the lease, but we did have a great lawyer who helped us read through all the details. We signed a 5 year lease with an option to renew, which I still believe are the right terms. Unfortunately landlords have a lot of power in San Francisco and in general the leases are more favorable to them. You don't have a lot of negotiating power when you really want the space and you are competing against other people.

Once we got into the space, we did not use an architect, but hired a great contractor that did many of the stores on our street. He came in under budget and on time, which is quite a feat! I do recommend that you should speak to at least 3 referrals for anyone you hire and when working with a contractor, you should definitely stay on top of all the expenses on a weekly basis.

One last piece of advice is to try not to pay "key money" or additional cash to buy your way into a lease. Key money isn't always a factor in negotations, but it comes into play during a hot market. There are enough up front expenses to pay: security deposit, remodeling, purchasing inventory etc. that paying key money makes it that much harder to start making money. Lastly, try to stay calm through the whole process because unfortunately you can't always control the outcome. Determine what you can do: 1) hire the best broker 2) put together a compelling presentation and 3) manage your start-up expenses and then wish for a bit of good luck!

Last updated: 09.16.2008 10:49 AM

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