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Commercial Real Estate
Nov 15, 2014

Does Less Rent Mean More Profits? – Part II

Sponsored Content provided by W. Grayson Powell - Broker, Managing Partner, Coldwell Banker Commercial SunCoast

In part one of this two-part series, I asked a simple question: Are there business owners out there who don’t want to minimize how much they pay to rent their business space? The answer is, “Yes, those people do exist.” They are savvy business owners who understand that when it comes to choosing a business location, there are much more important considerations than price per square foot.

As I outlined in the first article in this series, ingress and egress points, where your employees live, and the amount of drive-by and foot traffic at a location are all important factors to a business’ success. If you manufacture a product, proximity to key suppliers as well as highways, waterways, ports or railways become added concerns. Then take into consideration that rent is tax deductible, and you begin to understand why the cheapest option isn’t always the best one.

But there’s another factor that is just as important in choosing a business location. It can contribute to the success or failure of a business just as much or more than the ones I’ve mentioned already.

Marketing.

From signage to storefront, a business’ location should be viewed as an opportunity to market the product or services you sell or manufacture. A strong marketing effort is paramount to most business’ short- and long-term survival. The right business location can mean that you get immediate brand recognition. It should be considered as part of your overall advertising budget. It also can boost your brand recognition and reputation simply by association with its surrounding businesses and neighborhood. It can draw paying customers through your doors and to your product.

Let’s take health care as an example.

In recent years, many medical centers have developed a strategy of opening offices in high-profile locations. When I was growing up, doctors’ offices were located nearby dentists and other practitioners in out-of-the-way places such as office parks or on hospital grounds. Today, doctors’ offices are being built on major streets and in upscale areas. Hospitals are also following this trend by setting up outpatient services in high visibility areas that are away from the actual hospital. This allows them to increase their overall footprint and makes them more accessible to the general public.

What is driving this movement of medical centers into premium locations? Increased competition and a modern business environment that is more demanding than ever. As outpatient facilities are developed by competing entities that are offering the same services as the hospitals, hospitals are finding that they must provide the same accessibility and visibility to compete. Health care organizations have learned that they must consider the amount of marketing exposure provided by the location of a property.

Drug stores and pharmacies have followed. These days, it seems that large drug stores are sprouting up at every intersection with heavy traffic. In fact, many of the recently constructed drug stores in our area have paid upward of $3 million or more per site for their location alone. Location matters because these big drug stores aren’t just places to fill prescriptions; they are a quick stop for time-crunched customers who need to get milk, bread and other items that the convenience stores provided before them. Naturally, this same convenience brings customers to the drug stores’ prescription counters as well. The location works and has become essential.

Health care is only one example of how marketing strategy should tie into decisions on where to locate a business. It’s a strategy that is easily backed by hard data, including demographics and traffic statistics, and information on neighboring businesses.

When you are looking at numbers only, its can seem like an easy move to choose the cheapest options. But successful business owners make decisions that support their long-term goals – expanding market share, providing employment opportunities, and adding services that will provide strong revenue streams.

Research and knowledge are essential, and an experienced broker specializing in commercial real estate can provide the information you need to assess whether a property will meet the specific needs of your business. Working with a qualified broker who can help you sift through the immense amount of information that is available to potential buyers will allow you to find a property with the marketing exposure you need to grow your business.

Grayson Powell is a Managing Partner at Coldwell Banker Commercial Sun Coast Partners (CBCSCP). CBCSCP leverages the vast experience of highly-skilled real estate professionals and developers who specialize in selling, leasing and managing retail, commercial, and investment property. To learn more about CBCSCP, visit www.cbcwilmington.com or call 910-350-1200.

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