Renting the best retail space location can make or break a business however not everyone can afford to pay the high lease rates demanded by the most desirable retail real estate. So what is the solution?
Co-retailing is a concept of two companies sharing retail space. Since small retail spaces may not be available or affordable in the most desirable areas it can make perfect sense for two retailers to join forces as long as they have complementary services and products. They are able to display separate logos on the front of the shop and still operate as independent retailers however now they get to share the cost of rent, utilities, wi-fi, cleaning, and all other expenses. On your own retail space at $50 sf might be too expensive however joining forces with another retailer cuts that in half. Other benefits of sharing retail space include being able to collaborate, reach new clients, and ability to bring fresh awareness to your services.
In major cities such as Austin, Tx retail space lease rates and occupancy rates are at an all time high making it hard for the smaller businesses to find space or even be able to afford it. Sharing retail space is kind of the entrepreneur's version of sharing an apartment. If you are able to maintain the same sales you are able to increase your sales per sf by sharing space.
Co-retailing isn't anything new as Starbucks has been doing this for years with Barnes & Noble, however it's becoming more common as the cost of retail space continues to rise. The businesses are still able to run independently and their cross promotion possibilities are endless.
Things to Consider When Sharing Retail Space
Sharing retail space is a great idea however keep in mind that you will always be dating, meaning you will have different business objectives. you also want to make sure you don't confuse your customers. In the event things don't workout you want to incorporate some sort of “back out” clause in the lease. For example say you share a 3,000 sf retail space and your retail roommate decides to move out after a year. In this situation you would want to have a negotiated a clause in the lease that says you have the ability to move out in the event you can't find a new retail roommate within 6-12 months. The landlord could also have the opportunity to replace that company however if who they found didn't workout within 4-6 months then you could terminate the lease.
If you have any questions about sharing retail space in Austin, Tx feel free to contact us.