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Types of Retail Space Matter

 •  6 min read



Cameron Wilson

About Author

Major anchor stores bring in small businesses and thriving local economies

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“Retail” is the term we use to describe any space where customers physically come to the space to conduct their business. From shopping malls to grocery stores, from nail salons to banks, all of these businesses operate out of a retail product type.

  From there, however, it breaks down into many smaller sub-types which can be used to help narrow your search to the right space for your business. 

  Below is just a short list and explanation of some of the primary retail sub-types:

                 Power Centers

  These large retail developments primarily target users in the 25,000sf and up size range. 

Also known as “destination retailers”, customers will drive to these large shopping centers for the sole purpose of shopping at one of the stores there. For the most part, these retailers are large national chains with the loyal customer base that can support rents that can exceed $100,000 per month; retailers such as Bed Bath & Beyond, Best Buy, PETCO, Office Depot, etc. 

  This type of product is off limits for all but the largest and most well established local retailers, with the sole exception of…

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    Pad Sites

  Where Power Centers are usually developed at the rear of a large parcel with enormous parking lots in front, they often leave some smaller perimeter sites with street frontage available in the front of these and similar centers. These smaller sites can be developed later, once the power retailers are already established and drawing customers to the site. 

  Pad sites are a tremendous opportunity for smaller and local retailers to capitalize on the steady flow of traffic into the center as customers shop at power stores. Frequently occupied by small banks, restaurants, and service-related businesses like insurance, these users will catch the eye of customers who will pop-in for a quick bite or service. These spaces also commend higher rental rates, but offer their businesses a steady stream of customers who will see their business every day, which makes them a very attractive option for small businesses.

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Grocery-Anchored Centers

We’ve all seen centers like these before – we are usually there at least weekly picking up our groceries. And of course, if you’ve seen the grocery store, you’ve probably seen the “in-line” spaces that abut the grocery stores. These in-line spaces also benefit from the existing customer traffic generated by the grocery “anchor”. 

  Another item of note concerning grocery-anchored centers is how they are developed to begin with. Many grocery chains have certain thresholds for rooftops in a surrounding 1-to-5-mile radius. Small retailers can benefit from the exhaustive research these large chains put into their site selection. 

  By choosing to locate in a grocery-anchored center, you can rest assured that there are a large number of homes in the area – at least enough to support a grocery store, and that translates to a large base for potential customers for the smaller retailers as well.

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Neighborhood Shopping Centers

  The final retail product type are the smaller, less centralized “neighborhood” shopping centers. Typically 25,000-square-feet or less in total, these projects offer smaller spaces which usually fall in the 1,000-3,000 square-foot range. Because the developers have a smaller total investment in construction, they are often available at much lower rents than any of the other product types. They are also frequently located in close proximity to residential areas, relying on customers looking for a quick service such as hair, nails, or tanning, or to pick up a small retail item like batteries, cigarettes, etc. Because the suite sizes are small and the rents are low, neighborhood shopping centers are usually the first stop for a new retail business as they test the local market demand.

  For as many of the product types as we’ve discussed here, there are even more specialty retail locations like regional malls, lifestyle centers, and mixed use projects which each come with their own set of pros and cons. But they rarely work for the small retail business which is why I’ve declined to go more in depth. 

  At the end of the day, the best advice I can offer to someone considering opening a small retail business is to sit down with an experienced commercial broker in advance. Talk with them about your products/services, and who your potential customers will be. From there, we can help identify the location which will give your business the best opportunity for success. You have everything to gain and nothing to lose, so talk with a commercial broker at Bradley Scott today! 

 Cameron Wilson is director of brokerage and business development at Bradley Scott. He can be reached at (360) 479-6900 ext. 219.

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