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Leasing retail space seems like it should be easy. You just drive to shopping centers which are near your house and select one which is convenient for you. Then you call the leasing agent and ask them to send the lease. Then sign the lease, mail it to them and you are in business -- right? Of course, this is just about the worst way to approach leasing retail space.

Leasing retail space begins by deciding upon the type of retail or service business. That decision is beyond the scope of this article. Once you have determined the type of retail business, your first step in leasing retail space is to research your competitors and the industry.

Start by preparing a map of space leased by your firm and your competitors firm within your metropolitan area. Either color code or use a number system to identify which leased spaces are occupied by each of your competitors. If you are contemplating a ubiquitous type of business such as a nail salon or convenience store, map properties within a sector of the city or metropolitan area.

Next review the map and analyze store locations for trends. Are well-established professional firms already in the business? How many stores should they have in the metropolitan area? What is the distance between stores? How would you describe the level of income, education and growth for the areas they have chosen?

Next, visit the retail space in your metropolitan area occupied by your competitors. What types of retail had they chosen? In other words, are they in unanchored strip centers, shadow anchor strip centers, anchor strip centers, anchored neighborhood centers, unanchored neighborhood centers, community centers, regional malls or freestanding retail locations? If they are in a shopping center, what type of space do they have? Is it an end cap, in-line space, or an elbow space? Are they on the first floor or the second-floor? Make notes on their signage, visibility, and ingress and egress from the center. Are they in a location with easy access convenient to public transportation?

Visit stores which seem to be more prosperous. Make notes regarding the amount of space, layout, signage, merchandise mix and pricing. Shop the store. Ask questions of the retail sales staff. In some cases, you may want to tell them you are considering opening a competing store in another part of town. Most people are friendly and want to help if it won't hurt them. Ask is your store successful. Ask questions about their clientele. What types of people shop at the store? Who are their best customers? What do customers want? Is price more important or service more important? What merchandise moves best? Which distributors do they like best?

Travel to retail spaces occupied by competitors in three to five other cities. Repeat the process of making notes regarding relevant items and speaking with the retail sales staff. Attempt to learn the best practices and new trends. Do your competitors in other cities employ an approach not used in your city? Is it successful? Most business success comes from incremental improvements. Few people make the breakthrough improvements such as inventing the telephone or the electric light bulb. However, by doing research regarding what is working best for your competitors in your city and in three or five other cities, you radically improve your chance of successfully serving customers and having a successful business.

The next step is to compile data to infer what makes a retail space location successful. For perhaps 5 to 10 (total) of the more prosperous stores within your metropolitan area and in other cities, compile data for the relevant radius regarding demographics and psychographics. Demographics includes information such as the number of households, population who lives in the area, population who works in the area, income level of people who live in the area, income level of people who work in the area and population growth trends.

Psychographics is a relatively new concept in terms of regular application by business. Psychographics considers the income, education and attitude of the residents. People are divided into six plus groups based upon a series of criteria. Many businesses set down that psychographics are more insightful in estimating the location of a business versus demographics. A successful location will need to meet certain demographic criteria. However, locations which meet these criteria can be evaluated more carefully using psychographics.

A great retail space for your business needs to be the right type of space in the right location. The previous portions of this article addressed location. This section will address options for the type of retail space.

Some purchases are made on impulse and other purchases are made after careful planning. Retail for the carefully planned shopping will be termed destination retail. Starbucks is a great example of an impulse purchase. You see a Starbucks location and decide to pullover and have a coffee and perhaps a pastry. Have you noticed how Starbucks almost always has incredible locations?

If they are in a shopping center, they're almost always in an end-cap location. If they are part of a larger shopping plaza, they typically have the best a location within the shopping plaza. If the retail space you are seeking involves impulse purchases, you should see prime space. Great visibility and great access are both important. Even though it will be painful, you probably need to pay for the very best possible location.

If you are seeking retail space for destination retail, an incredible location is not necessary. You need to be in the right area but you do not necessarily need the finest location within the shopping center. Almost all destination retail has a convenient location with good visibility. While access is a factor for destination retail, it is much less important in comparison to impulse purchase retail.

Anchored retail space has a retailer who generates an amount of traffic. The anchor is typically a larger store or perhaps even a set of larger stores. A grocery store is the anchor for most neighborhood shopping centers. Department stores have typically been the anchors for regional malls.

Shadow anchor refers to a shopping center (typically a strip shopping center) which has a mall by virtue of being proximate to a major retailer. Target, Wal-Mart, Sands, Costco and IKEA are all stores which would be good draws for a shadow anchor shopping center.

End-cap is the space at the end of a shopping center, typically at the end of a strip center.

In-line space is space in a shopping center which is not at the end. In other words, it is space between the two ends of the shopping center.

The optimal retail space for your business will be obvious in many cases. If you're planning a gas station/convenience store, you would clearly not open it within an enclosed shopping mall. If you are planning a department store, you would not open it in a strip center.

However, there are variations in judgments regarding the best location for a retail store for many types of businesses. Many retailers have a combination of in-line shopping store space and freestanding stores. A freestanding store will likely be more expensive. However, a freestanding store gains more visibility. In most cases, you can effectively place advertising or signage on each side of the building. Your business has much better visibility in comparison to in-line space.

An end-cap space in a shopping center which is perpendicular to the street also has excellent visibility. Restaurants frequently locate in end-cap spaces. If your product or service is an impulse purchase with a relatively low price point, give serious consideration to obtaining premium retail space. Consider paying the additional cost for either a freestanding location or end-cap. Enclosed regional malls can provide a good option for impulse purchases or high-end merchandise.

Enclose regional malls have recently bifurcated into either prime or secondary/tertiary quality malls. The prime malls are doing great. They tend to be full and have an excellent array of tenants. The secondary and tertiary malls are doing fairly to poorly. In many cases, the highest and best use of the property has changed. Many second-tier regional malls are either being redeveloped as retail, perhaps as a power center, or are being scraped and rebuilt in a variety of land uses.

Conversely, if your product or service relates to destination retail, consider cost-effective retail options. In some cases, space in a neighborhood shopping center where the anchor tenant has gone dark (anchor tenant has left the states but is still paying rent) they provide a great overall location and a modest price for rent. For tenants who need larger retail spaces, second-generation grocery store space can be a great option. And the big boxes also provide retail space typically in a good location at much more moderate prices. As Wal-Mart has revised their basic template, they have vacated many medium-sized retail stores. In general, second-generation retail space provides a much less expensive cost of occupancy than first-generation space.