5 Minute Read
Scouting for commercial real estate can be a daunting task for many entrepreneurs.
Chances are you may exhaust your resources by scouting locations that aren’t ideal for your business and making decisions on limited data.
Picking a site based on limited data might result in a bad location choice and it’ll cost you your whole business.
This is why leveraging data to your side is crucial when it comes to location selection and scouting commercial real estate.
In this article, we’ll list the common mistakes you should avoid when it comes to location scouting, and finding retail space, and how you can approach those mistakes instead.
9 common mistakes to avoid when scouting locations for commercial real estate property
1. Neglecting thorough market research
Failing to conduct comprehensive market research is one of the most common errors in location scouting.
Without a deep understanding of the market, you may risk choosing locations that don’t align with your business’s operational goals or customer base.
Market research provides insights into property trends, customer behaviors, and competition, helping you make decisions grounded in data rather than assumptions.
What to do instead:
- Study recent trends and existing businesses in your target area.
- Analyze customer demographics to ensure the location aligns with your target audience.
To analyze a location’s foot traffic trends, customer base, and more you can utilize our location intelligence tool.
Once the locations are shortlisted, follow these steps to simplify the property selection process.
The ideal process to effectively scout commercial properties:
Once the desired markets are shortlisted, you can add these to our MarketConnect app to let your BD team begin scouting for commercial properties in the area.
The collaboration with the brokers is also made easier for the BD team since individual brokers can be added where they can suggest relevant properties as well.
From a single dashboard, the BD team can view properties based on leadership priorities, including rent, carpet area, and more.
The BD team can then upload survey reports, which leadership can download as PDFs in seconds, making the process seamless.
Sign up on our platform and access our product suite for free!
A property added in the MarketConnect app
2. Neglecting the competition
Opening your businesses without doing competition analysis will either result in operational struggles or missed opportunities as opening your business next to a competitor can actually benefit your business, if the location is perfect.
So, a thorough competitive analysis is key to finding the right balance in your journey of finding a retail space.
What to do instead:
- Conduct a competitive analysis to identify market gaps.
- Evaluate the performance of nearby businesses in your industry.
- Choose a location that complements, rather than conflicts with, existing businesses.
How to analyze competition while location scouting?
Analyzing the competition landscape can be easily done within minutes with our platform.
You can visualize competitor locations in the area and their footfall within the catchment to have a better understanding of your target location.
Also, you can get a clear picture of market saturation in the area, and helps you spot opportunities in underserved areas by reaching out to us!
3. Overlooking zoning laws and permits
Zoning regulations determine the type of activities allowed on a property, such as retail, industrial, or residential use. Ignoring these laws can lead to legal complications or prevent your business from operating as intended.
On the other hand, permits are equally crucial, as they ensure compliance with safety and operational standards. Overlooking these aspects can result in hefty fines or worst case, even business closures.
What to do instead:
- Consult a legal expert.
- Verify the zoning classification of the property with local authorities.
- Ensure the property complies with your business’s specific operational requirements.
4. Underestimating location accessibility
Accessibility is a key factor in determining whether customers, employees, and suppliers can easily reach your business.
A poorly accessible location can lead to reduced foot traffic, delivery delays, and more inconvenience for many.
Convenience matters, especially in competitive markets where accessibility can influence customer loyalty and operational efficiency.
What to do instead:
- Evaluate your target property’s proximity to major roads, public transportation, and parking facilities.
- Assess the area’s walkability score and ease of delivery access.
These factors can also be easily accessed with our location data at street level to ensure you pick a property that works well for your customers, employees, and manufacturers.
5. Ignoring long-term growth potential
Businesses often focus on immediate needs when scouting for commercial real estate but fail to account for future expansion.
Without considering growth potential, you may risk outgrowing the space, incurring relocation costs, or missing opportunities in an area that could see major development.
So, investing in a property with scalability can provide financial and operational flexibility in the long run.
What to do instead:
- Go through local news, and evaluate the area’s development plans and growth trajectory.
- Consider properties that offer scalability, such as expandable layouts or additional square footage.
- While hunting for a commercial property, factor in future workforce and operational expansions.
6. Focusing solely on cost
Being cautious about your budget is important but making decisions purely based on cost alone can lead to compromises in quality, location, or functionality.
Cheap commercial properties may come with hidden expenses, such as high maintenance or renovations, which could offset initial savings.
Prioritizing cost over value during location scouting might also lead to choosing a location that doesn’t align with your business strategy.
What to do instead:
- Assess the total cost of ownership – including taxes, maintenance, and utility costs.
- Balance affordability with quality, location, and amenities.
- Perform a cost-benefit analysis to evaluate the long-term financial impact.
7. Skipping professional inspections
Structural damage, outdated electrical systems, or plumbing problems are a real headache and these may be overlooked if the commercial property is evaluated only by yourself or without conducting professional inspection.
These problems can further lead to unforeseen costs, safety hazards, and compliance issues that disrupt your business operations.
What to do instead:
- Hire licensed inspectors to evaluate the property’s structural integrity, electrical systems, and plumbing.
- Obtain an environmental assessment to identify any contamination risks.
One bonus point is that you can also use these inspection reports as leverage during lease negotiations.
8. Overlooking lease or purchase agreement details
Real estate contracts often include legal “jargon” and clauses that can be hard to understand.
Failing to review these details thoroughly can lead to unfavorable terms, unexpected fees, or limitations that restrict your business operations. Agreements should be well scrutinized to avoid future disputes.
What to do instead:
- Ensure clarity on property restrictions.
- Consult a real estate attorney to review lease or purchase agreements.
9. Rushing the decision-making process
Finally, the pressure to secure a property quickly can lead to hasty decisions that overlook critical details.
Whether it’s due to FOMO – fear of missing out or a competitive market, rushing through the process can result in poor choices that harm your business in the long term.
Taking a methodical approach ensures that all aspects of the property are evaluated thoroughly.
What to do instead:
- Take the time to conduct due diligence, even if the market is competitive.
- Create a checklist to evaluate all critical aspects of the property.
- Utilize location intelligence platforms.
Conclusion
Avoiding these common mistakes in location scouting can save you time, money, and unwanted frustration.
To find a retail space that is suited for success, a strategic approach that combines thorough research, professional guidance, and the use of advanced technology is much needed.
