For many would-be entrepreneurs, just knowing where to start can pose an enormous challenge to striking out on their own.
Some retail REITs are now rolling out programs intended to help these potential tenants start off on the right foot. Since the beginning of 2012, DDR Corp. (NYSE: DDR) and Kimco Realty Corp. (NYSE: KIM) have implemented two such initiatives.
These retail REITs are taking a creative approach to luring local business owners and franchises to fill smaller, vacant spaces in their shopping centers. While DDR's new program helps fledgling small business owners incubate new concepts, Kimco's program focuses on streamlining the process for business owners looking for franchise opportunities.
Set Up Shop in this Space
DDR officially launched its hands-on Set Up Shop program on Feb. 2. The effort is geared towards small-shop leasing.
The first few months of a new business venture are critical to long-term success, according to Paul Freddo, DDR's senior executive vice president of leasing and development. Set Up Shop gives participants access to a team of experts that will work closely with them to help ensure their ventures get off to a good start.
Freddo says the program creates a win-win situation for both the company and the business owner. DDR can attract tenants to some of its smaller spaces that are usually more challenging to lease. In turn, the company is offering free rent to participants during the first six months that they are in the Set Up Shop program.
"It's really about the flexibility, the shorter-term deal and free rent," Freddo said. "The win for us is that it reduces expenses at the asset level."
DDR has partnered with SCORE, a national nonprofit association for entrepreneurs, to help get the program off the ground. The association will serve as a resource for Set Up Shop tenants, and its volunteers will offer free business counseling.
The program has initially launched in specific locations within 24 Atlanta-area shopping centers. Freddo says there's no limit on the type of small business that can be considered for the program, including general retail or service-oriented businesses such as investment counseling or tax services.
Kimco, on the other hand, went the technological route. The New York-based REIT introduced its new FastTrack franchise program in January. FastTrack offers a way for entrepreneurs, franchisees and franchisors to find new opportunities within Kimco properties.
The company has tools on its website that allow potential business owners to select a specific franchise and find pre-approved sites within Kimco's portfolio to open their business. They can also search by location to see which franchises have pre-approved spaces within the center.
Brett Cooper, Kimco's Northeast region leasing associate and developer of the FastTrack program, says the company is also putting window signage in vacant spaces within their centers to let people know that that those spaces are pre-approved for specific franchises. Ultimately, the goal is to attract smaller, local businesses.
"The smaller spaces are the toughest ones to lease," he says. "It's where the mom and pop shops are that have been vacant for us. This is a way for us to ramp up leasing in the sub-5,000-square-foot spaces."
Retailers such as Pearle Vision, Cheeburger Cheeburger, the UPS Store and other chain stores are among the 18 national retailers listed so far. Cooper is working on adding another group of 10 chain retailers to that list by the end of the month.
FastTrack is currently available in 46 of Kimco's shopping centers in the Mid-Atlantic region. Cooper says the goal is to make the program available throughout the company's portfolio within the next six to 12 months.