CREJ - Retail Properties Quarterly - August 2016
I began leasing commercial retail space in Denver nearly three years ago and soon realized that several potential clients were excluded in the current commercial real estate equation. While international and coastal retailers are vying to have a go in the Denver market, many smaller retailers without sophisticated financing and connections are unable to compete for space. But small businesses are no longer a small part of the economical equation. According to the U.S. Small Business Administration, the small-business sector in America now occupies 30 to 50 percent of all commercial space, an estimated 20 billion to 34 billion square feet. Thankfully in Denver there are resources available to help smaller businesses get support. The National Community Development Fund is an impact investment fund that empowers mission-driven, minority-owned and designated small businesses. The organization not only funds small to medium businesses so that they may grow, but also it strategically advises them so that they may be profitable and target the appropriate customer base from its new “Gates Center” accelerator offices. In addition to the support provided by the NCDF, assistance with real estate is another significant need for the minority business owner community. After several years of immersing myself in the technicalities of commercial real estate, I realized my Spanish language skills and connection with Denver’s growing immigrant community uniquely positioned me to help minority- and women-owned business owners who had previously been underserved. The following takeaways are applicable to members of the small-business community. Foresee potential challenges. Platinum Elegance Bridal is a business owned by two savvy African American businesswomen, recently recognized as top bridal planners in Denver. After meeting them, I quickly became impassioned with their goal to open a retail showcase space. In spite of having a number of years of successful business behind them, the owners lacked the sophisticated financial backing that would allow them to get the space they desired in such tight market conditions. I realized that the NCDF could help them obtain formal financing. By coordinating with the NCDF in advance, Platinum Elegance Bridal is in the process of securing a loan as well as using proceeds to purchase a cash-flowing complimentary bridal business. Once closed on the initial location, I will work with the owners to find additional retail locations for growing the brand. The ability to foresee and tackle clients’ broad-based issues is key in helping them move into retail space they deserve. Make the right connections. SHINE with Salon Noëlle is another client that was assisted by NCDF. Its lease in Cherry Creek North was coming to an end, which coincided with the owner’s expansionary plans. This small hair salon was in the process of transforming into a one-stop-shop for fashion-forward urban women. The salon, which offers boutique clothing for women of all sizes, an aesthetician and make-up and hair stylists, needed an accommodating space for its services. While I wanted to assist the owner with her real estate needs, I knew that many landlords would overlook her for financial reasons. After introducing her to the NCDF, she managed to secure a small business loan backed by the U.S. Small Business Administration, when other banks already had turned her down. The salon is moving into a new space on Old South Pearl Street. By making the right connections and using contacts of a minority owned contractor, we were able to triple the size of her space and relocate her business to the heart of her desired customer base next to the light rail on a transit-oriented development that will bring significant foot traffic. Evaluate and apply industry trends. Instead of being zeroed in on the way a small business has always done things, it’s important to take stock of the overarching industry trends and whether these trends should influence your real estate strategy. For example, I am helping the owner of El Señor Sol, a family owned Mexican restaurant, relocate its Denver Tech Center location to another site in south Denver. However, before narrowing in on sites, we first evaluated the space needs based on the changing nature of the dining industry. Instead of a large-format restaurant that caters to diners looking to maximize their time in the restaurant, we have downsized our focus as customers want a more fast-casual experience. In another example, following the trend of more medical centers embracing retail locations, I am working with Gleam Laser Hair Removal and Med Spa to move its office from a hidden-away medical office building to a retail location with a sufficient level of customer interface. One of the wonderful things about helping Denver’s small-business community is that when they succeed, we all benefit. It serves both the individual and the community to have a diverse array of local retailers. It also is important that the growing minority population is adequately represented in commerce. Often with inadequate financial experience, small-business owners may have trouble breaking into the market or competing for space and customers with more scalable, well-backed or bankable businesses.