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urban area where Stephanie lives is called Tenderloin Villae because of its
lurid past. Today, however the neat, well-kept brownstones and comfortable
neighborhood make it feel like trendy enclave. Many residents have done the
remodeling work themselves and take a great pride in their neighborhood. About
20 small retailers are now in an area of the village adjacent to the convention
center complex, along with some vegetarian and nouveau cuisine restaurants.
There are also three small women’s specialty clothing stores. The site
available to Stephanie village main street on the ground floor of an old house.
Its space is also about 900 square feet. Rent is 15, 000 annually, with no
extra charge based on the level of sales. The landlord knows Stephanie and
require a 2-year lease.
Apple tree Mall
suburban mall has been open for 8 years. A successful regional center, it has
three department stores and 100 smaller shops just off a major interstate
highway about 8 miles from downtown. Of its nine women’s clothing retailers, three
are in price category considerably higher than what Stephanie has in mind.
Appletree has captured the retail business in the city southwest quadrant,
although growth in that sector has slowed in the past year. Nevertheless, mall sales
are still running 12 percent ahead of the previous year. Stephanie learned of
plans to develop a second shopping center east of town, which would be about
the same size and character of apple tree mall. But ground breaking is still 18
months away, and no renting agent has begun to enlist tenants. The location
available to Stephanie in Appletree is two doors from the local department
store chain. At 1,200 square feet its slightly larger than the other two possibilities.
But its long and narrow 24 feet in front by 50 feet deep. Rent is $24 per
square foot (28,800 annually). In addition, on sales that exceed $411,500, rent
is 8 percent of sales. There’s an additional charge of 1 percent of sales to
cover common-area maintenance and mall promotions. The mall five years lease
includes an escape clause if sales don’t reach $411,500 after two years.
List the pluses and minuses of each
What type of store would be most appropriate
for each location?
If you were Stephanie, which location
would you choose? Why?