There are always many types of retail properties available for investors to purchase. What's a retail property? Think convenience and shopping — any building that houses a business where the public goes to buy a product. Typical kinds of retail properties include large and small malls and other buildings occupied by pizza parlors, restaurants, clothing stores, convenience shops, grocery stores, pharmacies — it's an endless list.

Finding a good location for a retail building is slightly different from finding a good space to locate an office or other commercial property that the public uses in some way. If you're shopping for a pair of shoes, you expect to be able to get to the building easily and to park in a convenient and safe place. If you can't, you'll go to another shoe store.

When you visit your doctor's office, you'd like those features, but you won't necessarily change doctors just to get them. Comparing the places you like to shop with the places you avoid is a very personal way to begin evaluating retail locations.

Retail stores can exist on any level of a building, but spaces located on the building's entry level always command more rent, even if an elevator is available to take shoppers upstairs. Good parking is critical, and sometimes congested parking areas can be reworked to provide more spaces and a better flow of traffic.

Leases for Retail Buildings

Depending on their location, retail buildings might be leased or rented by the square foot or by the amount of frontage they offer along a busy street. Frontage is determined by measuring the total linear feet the building occupies along the length of its main entrance — the side of the building that's most likely to attract customers. That method is often used for popular locations in busy shopping districts, where retail space is in much demand. The square footage method is an alternative that can be used for any property.

Some landlords require retail tenants to sign a percentage lease, in which a portion of the rent is based on the tenant's gross or net income. The lease usually includes a minimum amount of rent that's due no matter what the tenant's income. You'll find that leases vary quite a bit from area to area, so you must do some research to learn which kinds are typical where you live.

Investing in Strip Malls

Large shopping malls are out of the reach of most investors, but small strip malls are often affordable. You've seen them — they're retail complexes where businesses are typically housed side by side in one long building, although L-shaped malls and other configurations are also common. For best customer traffic, a strip mall should include at least one store that appeals to a wide segment of the population, such as a clothing retailer, a grocery store, or a chain pharmacy that stocks other items in addition to pharmaceuticals. Additional tenants that can fill in the gaps are pizza shops and restaurants, florists, health-food stores, and numerous other types of specialty shops.

Having a good mix of businesses helps the mall appeal to many people, and that appeal drives traffic to the complex, benefiting every business in it. What's a good blend? That combination differs for every area. For instance, if there's a college nearby, a good mix might be businesses that appeal to college students and other residents. How about a bookstore, a copy shop, and perhaps a store that specializes in shipping packages?

If your plan creates a steady flow of customers, it won't take long for tenants to see positive results, and flourishing tenants means continued cash flow for your property.

Take some time to research your local market. Which strip malls in your town seem to always be rented? Have the same tenants occupied those centers for quite a while, or does there seem to be a constant turnover? Why do you think people are attracted to the popular malls? The more insight you have into a mall's success, the more likely you are to make your own venture a successful experience.