In Part 1 of this series, we determined the type of business, the reason prospects are looking at your particular property, and what the rental budget is. Now, you might be ready for a face to face meeting, a tour of the property, and/or further detailed financial analysis.
Continue with these 3 KEY Questions for further qualifying your prospects:
4. What special requirements do they have for the space?
Does the prospect have power requirements that may exceed what is currently serving the premises and/or center? Do they have parking requirements that must be code verified? How about a specific linear storefront requirement? Some national soft goods chains have inflexible requirements on store frontage. Is a single or double door required? Do they need a loading dock or access to a dock for large deliveries? Restaurant prospects always have special requirements you need to be aware of, including grease traps (location and # of gallons), gas lines & water lines (does the service exist, and if so, are the lines sufficient for the size of the premises and up to current municipal codes?
5. How will the operation be financed?
What is the source of capital? In many cases, your local prospects will have no barometer for how much it will cost to open a location. The source of capital now, and in the future is critical to identify up front. Will they be obtaining financing? If so, do they have a pre-approval letter from a Lender? SBA Lending is back, and rates are low. Often your SBA contact can help further qualify prospects for you. It’s also a good idea to have a Commercial Lease/Financial Application Form to send to all prospects to fill out prior to showing space. This process will easily weed out “tire kickers” that have no real intention of opening a business.
6. How long of a term are they willing to sign?
Shorter term leases offer fewer incentives than longer term leases. Does the tenant require a term to match a financing requirement, such as 10 years? Prospects often ask how much TI the Landlord is offering; there is a direct correlation to the length of a lease term, the amount of TI dollars a Landlord is willing to invest into a new lease, and the credit strength of the prospect. Remember, if the prospect obtains a loan, they may require less TI contribution, but they still have a loan payment.
What types of prospects are coming to your property,
Where those prospects need to be located,
When those prospects are ready to move forward,
Why they are seeking space, and
How prepared are they as business operators
These are basic fundamental questions for understanding where your prospects are in the deal process.
Fully qualified prospects for the correct location saves precious time and enables you to make stronger recommendations to your owners/investors/partners, leading to more long term successful tenants.
By: Bradley T. Balbo
Senior Vice President | Strategic Retail Group
Email Bradley: firstname.lastname@example.org
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