Q&A

What to ask before you pick your storefront

Real estate expert Genny Chang shares advice on what to know before signing a commercial lease

(Courtesy Genny Chang)

From luxury brands chasing flagship footprints to first-time entrepreneurs hunting for the right studio, retailers everywhere face the same challenge: finding a space that fits. Genny Chang, managing director at commercial real estate giant Newmark, has guided clients through it all. In this Q&A, the Southern California real estate expert shares practical strategies for negotiating with landlords and securing a lease that sets your business up for success.

—Interview by Marcy Medina, edited by Bianca Prieto

What questions should retailers ask their realtors about retail spaces? If they don't know what they don't know, what should they know?

Retailers should ask their real estate agents for information on their potential future landlords since they'll be tied to each other for the duration of the lease term: Are they a locally based owner, is it a national developer, who will you be dealing with on a regular basis for any issues that arise, and so forth. Other questions I would ask range from technical, such as getting the usable vs. rentable square footage of a space so you know what you're paying for, to a historical account of what prior tenancy has been like at the space, as well as on the street in general, so you get an idea of turnover in the area.

Can retailers negotiate on the rent? In what scenarios would this be possible? If a landlord won't budge on rent, what other concessions can they ask for?

Always try to negotiate on rental terms, because each landlord is different, and you don't get what you don't ask for. If a space has been vacant for some time, there's a greater likelihood of getting concessions on not just rent but rent abatement or a contribution towards a tenant improvement allowance. There's always the chance that landlords are firm on the rent, but perhaps they are receptive to toggling other levers, such as free rent or rent increases, for example.

What trends are you seeing in retail leasing right now? Are physical stores becoming popular again for smaller businesses?

Here in Los Angeles, there has been a rise in popularity of small, independently-owned cafes and fast-casual restaurants. People aren't shying away from spending money on their daily indulgences, so the most popular retailers are trendy, experiential destinations with a great vibe, whether it's a coffee shop or a workout.

What would your advice be if someone is trying to decide between established high-traffic retail neighborhoods and up-and-coming areas where rent may be lower?

I would first evaluate your existing customer base to see how close it aligns with your target clientele. If opening a brick-and-mortar location is intended to unlock a new or enhanced buyer group and to maximize brand exposure, I'd focus on established high-traffic areas. If the brand has already attracted a following through social media or word of mouth, then being in an up-and-coming area would be the better option.

What elements comprise the ideal retail space, i.e., natural light, parking, foot traffic?

Generally speaking, the ideal space is column-free with high ceilings, great natural light, access to on-site or nearby parking, and well-located with a thriving tenant mix that draws a lot of driving/foot traffic. Flexibility is key when finding an ideal space - you can always work backwards with a blank canvas. Retailers have the option of making a space more intimate by installing a drop ceiling, or creating a moodier setting using drapery or painting walls.