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Common Commercial Site Selection Mistakes and How to Avoid Them


When it comes to finding a potential commercial property, thorough due diligence is a critical component of the process for site selection. Conducting thorough research and analysis helps ensure that you make an informed decision that will benefit your business in the long run. Despite its importance, many investors and business owners make due diligence mistakes that can lead to regrettable outcomes. 


Not Considering the Location's Accessibility


When choosing a location for your business, it is important to consider how easily your customers and employees will be able to access the site. Accessibility is a crucial aspect that directly impacts the convenience and satisfaction of your customers.


Factors to consider include the proximity to major transportation routes, such as highways, public transit hubs, and busy streets. A location that is easily accessible via various transportation modes will ensure that customers can reach your business with ease while also making it more convenient for employees to commute to work.


The availability of parking is another essential factor in determining a site's accessibility. Ample parking spaces will accommodate customers who drive to your business, while a lack of parking may deter potential customers from visiting. Additionally, consider whether there is sufficient parking for employees or if they will have access to alternative parking options nearby.


The walkability of the area is also an important consideration to keep in mind. A pedestrian-friendly location with well-maintained sidewalks and safe crosswalks will encourage customers to visit your business on foot or by bicycle, especially if your business is located in a dense urban area. Walkability can also contribute to the overall appeal of the location, making it more attractive to potential customers and employees.


Considering traffic counts and traffic patterns will help you gauge the overall accessibility of the location. High traffic counts can indicate a bustling area with many potential customers but may also result in increased congestion and longer travel times. On the other hand, low traffic counts can suggest a quieter location that may be less appealing to customers but may offer easier access for employees. Understanding the traffic patterns in the area, such as peak travel times and seasonal fluctuations, can help you anticipate how these factors may impact your business.


Underestimating the Importance of Zoning Laws

Before finalizing your site selection, be sure to research the local zoning laws to ensure that your business will be allowed to operate in the chosen location. These laws are designed to maintain the order and compatibility of land uses, protect property values, and promote public health and safety.


Ignoring these laws can lead to costly delays and issues down the road. For example, if you open your business without the proper zoning approvals, you may be subject to fines, legal actions, or even forced closure. Additionally, if you have already invested in renovations or improvements to the property, these expenses could be wasted if you are unable to use the space for your intended purpose.


Take the time to understand local zoning laws and relevant covenants, conditions, and restrictions (CC&R’s) to ensure your business complies with regulations. Zoning laws can vary significantly from one jurisdiction to another, so it's important to familiarize yourself with the specific regulations that apply to your chosen location. You can typically find this information through your local planning or zoning department.


Some of the factors to consider when researching zoning laws include:


Permitted Uses

Make sure the zoning classification for your chosen location allows for your specific type of business. Some areas may only allow for certain types of commercial or retail uses, while others may be designated for industrial or residential use only.


Conditional Uses

In some cases, a specific type of business may be allowed in a particular zoning district, but only if certain conditions are met. You may need to apply for a conditional use permit and comply with specific requirements to operate your business in that location.


Parking Requirements

Zoning laws often dictate the number of parking spaces required for a commercial property based on the type of business and square footage of the building. Ensure your chosen location complies with these requirements, or be prepared to seek a variance or make modifications to the property.


Signage Restrictions

Zoning laws may also regulate the size, type, and placement of signs for your business. Understanding these restrictions will help you avoid potential fines or the need to remove or modify non-compliant signage.


The consequences of ignoring zoning laws can be devastating for your business, as it may result in financial losses, legal issues, and damage to your reputation. By thoroughly researching and understanding the zoning laws that apply to your chosen location, you can avoid these pitfalls and ensure a smoother, more successful start for your retail business.


Neglecting to Consider the Local Market

It's important to research the local market and demographics to ensure that there is a demand for your product or service in the area you are considering. A thorough understanding of the local market is crucial for your business's success and long-term sustainability. Failing to do so could lead to a lack of business, financial difficulties, and potentially the failure of your business.


Understanding the importance of market research will help you identify the local demographics and demand for your products/services, allowing you to make a more informed decision. Some aspects to consider when conducting market research include:


Target Audience

Determine the characteristics of your ideal customers, such as age, gender, income, and lifestyle preferences. This information will help you identify whether the local population aligns with your target market and if your products or services will appeal to them.



Analyze your competition in the area to understand their strengths and weaknesses, market share, and potential opportunities for your business. A competitive analysis will help you identify any gaps in the market and develop strategies to differentiate your business.


Market Trends

Stay informed about current market trends, emerging technologies, and consumer preferences that may impact your business. This information will help you identify potential growth opportunities and adapt your products or services to meet changing demands.


Economic Factors

Consider the local economy, including factors such as employment rates, median income, and housing prices. A strong economy with a stable job market and high consumer spending can be a positive indicator for your business's success.


Local Partnerships and Suppliers

Research potential local partnerships and suppliers that can help support your business. Establishing relationships with other businesses and suppliers in the area can lead to cost savings, increased visibility, and a stronger local presence.


Conducting thorough market research will enable you to make data-driven decisions and tailor your marketing strategies to resonate with the local community. Furthermore, understanding the local market can help you set realistic expectations for your business's performance, allowing you to better plan for growth and manage potential risks.


Neglecting to consider the local market when selecting a commercial property for your retail business can have severe consequences. By investing time and effort into understanding the local demographics, demand, competition, and market trends, you can make a more informed decision and improve your chances of success in your chosen location.


Not Negotiating the Best Lease Terms

It's important to negotiate the best possible lease terms with the landlord to ensure that you are getting the most value for your money. A favorable lease can have a significant impact on your business's financial stability and long-term success. 


To achieve this, consider the following factors during lease negotiations:


Length of the lease

The lease term is a critical aspect to consider. A longer lease term can provide stability and security, while a shorter term may offer more flexibility to adapt to changing market conditions or relocate your business. Evaluate your business's growth potential and future plans when determining the optimal lease term.


Cost of Rent

Understand the market rates for similar properties in the area and negotiate a rent that is in line with these benchmarks. Be aware of any additional costs, such as common area maintenance (CAM) fees, property taxes, and insurance that may be included in the lease agreement. Ensure that these expenses are reasonable and clearly outlined.


Rent Increases

Most leases will include provisions for rent increases, typically based on factors such as inflation or market conditions. Negotiate for reasonable and predictable rent increases, such as fixed percentage increases or increases tied to the Consumer Price Index (CPI), to maintain affordability and control costs over the lease term.


Maintenance Obligations

Understand which party is responsible for property maintenance, including repairs, landscaping, and general upkeep. Clearly outline these responsibilities in the lease agreement to avoid disputes and unexpected expenses. Consider negotiating for the landlord to cover certain maintenance costs or improvements, especially if they benefit the property in the long run.


Tenant Improvements

If your business requires specific modifications or improvements to the property, discuss these needs with the landlord and negotiate for an allowance or a rent abatement period to offset the costs. Ensure that the lease agreement clearly outlines the permitted improvements and any conditions for their completion.


Lease Options and Clauses

Negotiate for favorable lease options and clauses, such as renewal options, subleasing rights, or an early termination clause. These provisions can offer increased flexibility and protection for your business in various situations.


Incentives and Concessions

In a competitive market, landlords may be willing to offer certain incentives or concessions, such as free rent periods, reduced rent rates, or assistance with tenant improvements, to secure a desirable tenant. Explore these possibilities during negotiations to maximize value.


Getting the best value for your money is essential for your business's long-term success. By understanding and negotiating the various factors that contribute to a favorable lease, you can make a more informed decision and secure a lease agreement that supports your business's growth and financial stability.


Failing to Consider the Long-Term Potential of the Site

When choosing a location, it's important to consider not just the immediate needs of your business but also its long-term potential. Selecting a site with a strong outlook for future growth and development can contribute to the success and sustainability of your business. 


To determine the long-term potential of a site, consider the following factors:


Future Growth Potential

Research the area's projected population and economic growth. A location with strong growth projections can offer increased demand for your products or services, while a stagnant or declining area may limit your business's potential. Investigate planned infrastructure projects, new developments, or business expansions that may positively impact the area.


Ability to Expand the Business

Consider whether the site offers the necessary space or flexibility to accommodate future expansion. This may include the potential to increase square footage, add additional facilities, or expand parking. A site with limited expansion options may constrain your business's growth and could force relocation, which can be costly and disruptive.


Long-Term Desirability

Assess the likelihood of the area remaining a desirable location in the future. Factors that contribute to an area's desirability include accessibility, safety, cleanliness, and the quality of local amenities and services. A location that maintains or improves its desirability over time can attract and retain customers, employees, and other businesses.


Future Demographic Trends

Evaluate the anticipated demographic changes in the area, such as shifts in age distribution, income levels, and cultural diversity. These trends can impact consumer preferences, spending habits, and the demand for specific products or services. Aligning your business with evolving demographics can help ensure continued relevance and success.


Potential Risks and Challenges

Be aware of any potential risks or challenges that may impact the long-term potential of the site, such as environmental concerns, zoning changes, or fluctuations in the local economy. Develop contingency plans to mitigate these risks and safeguard your business's future.


Considering future growth and demographic trends will help you assess the area's long-term desirability and make a more informed decision. Balancing immediate needs with long-term potential is crucial for making a wise investment in your business's future. By carefully evaluating these factors, you can select a location that not only meets your current requirements but also supports your long-term goals and vision for your retail business.


It is crucial to avoid common due diligence mistakes when engaging in site selection for a commercial property for your retail business. Thorough research and planning are key to ensuring a successful commercial property selection for your business, ultimately leading to long-term success and growth.



Austin gottsacker >

Director of Acquisitions & Leasing

Austin Gottsacker started with SimonCRE in 2015 as a Development Associate, in January 2017 was named Acquisitions and Leasing Manager, and in 2022 was named Director of Acquisitions and Leasing. As Director of Acquisitions and Leasing, Austin works with the CEO, tenants, and brokers to execute client requirements as well as manage the in-house outreach and due diligence for the company’s projects. He is also responsible for the site investigation, underwriting, budgeting, site planning, and managing relationships for the company’s vendors and consultants. Austin then follows projects through the entitlement process to aid in a variety of challenges and help keep projects on schedule and on budget.

Site Selection Site Investigation Due Diligence Zoning Leases Acquisition Due Diligence Lease Terms Demographics Accessibility

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