When Forever Yogurt CEO Mandy Calara wanted to open a new shop on Boston’s Newbury Street, it seemed he had lucked out by taking over the lease of another yogurt store that had recently closed at 303 Newbury St.

But had Calara known a competitor planned to open across the street, he’d have thought again, despite what he described as a reasonable rental rate for the downstairs corner location near Hereford Street. Calara’s landlord might have thought twice as well, given the handful of other yogurt shops already open – or opening – within a two-block stretch, including Pinkberry and Emack & Bolio’s.  

“At the day of the [lease] signing, we also found out that Yogurtland is also opening,” nearby at 294 Newbury St., said Calara, whose new 1,200-square-foot Forever Yogurt store is expected to open in late August or early September. “We would not have chosen to go there if we knew they would be there.”

The decision of Calara’s landlord to replace the old yogurt shop with a new one begs the question of how landlords decide which prospective tenants can most effectively fill a space. Do they seek “cool” tenants that diversify a street’s offerings; those that fit a block’s certain ambiance might attract the same type of customer as neighbors do; business that require less build-out costs; or do they simply look for tenants with a proven model in order to pay the rent? The answer isn’t black-and-white, according to landlords, real estate professionals and tenants, especially considering economic trends, issues specific to certain streets and general landlord preferences when it comes to money.

Newbury ‘Mecca’

On Newbury Street, arguably Boston’s top landmark shopping street, there are all kinds of landlords, reflecting the diversity of the street, which at its start near the Boston Public Garden houses the likes of Valentino, Banana Republic, Cartier and the 29 Newbury restaurant. There are landlords who own one building housing art galleries, for example, and those owning entire blocks of the street offering high-end boutiques, restaurants and hotels.

Calculating tenant rent expense isn’t exactly standaRd. however. “Here on Newbury, I might get a landlord and he’s getting $8,000 [a month] for 1,000 square feet. If you can pay it, he doesn’t care who you are,” said Douglas Marr, senior vice president at Keliher Real Estate.

According to brokers and tenants, rents on Newbury Street vary from $90 a square-foot to as high as $2,000 per square-foot for the most exclusive locations, with most in the $100 to $200 range.

Sometimes, the standards are deep. “Certain landlords won’t even talk to a [prospective] tenant unless they have at least five stores,” said Thomas Brennan, a broker at C. Talanian Realty. National tenants are preferable to some landlords because they generally have better credit and will reliably pay the rent, he offered.

In fact, because some tenants are national with presumed stronger balance sheets, they are usually more than willing to pay Newbury Street prices, even higher, no matter how “cool” they are perceived to be. Brennan cited a recent example of a space available for $18,000 a month. Two tenants were interested and qualified but the one that offered above-asking rent got the spot.

In another recent example, Georgetown Cupcake entered the market at 83 Newbury St. last year. The company decided Boston was a must-have city to open a store when sales tracking showed that the company shipped “a ton of cupcakes” there, said Sophie Kallinis LaMontagne, who co-owns the business with her sister Katherine Kallinis Berman.

“We know exactly what and how much we bake on a Monday or a Tuesday. We’re a very data driven business. It took the firm a year to find the right spot with enough space for an onsite, high-end bakery and easy door access for stroller-pushing families.

It was all about the right location for the new 4,000-square-foot store, and the sisters were keenly aware of potential neighbors. Newbury Street newbie Warby Parker is now open directly above Georgetown Cupcake, while there is a Nordstrom Rack across the street.

“Landlords in general have a very good sense of what types of tenants they need in their spaces to keep their property values up,” said LaMontagne, who added that Georgetown Cupcake evaluated half a dozen locations and seriously considered a Boylston Street space. “Most of the landlords we work with care a lot about their buildings … We’re quite happy with our neighbors on Newbury.”

Planning For Success

Indeed, many landlords closely evaluate a renter’s potential success, including competitive factors, before signing the lease. John Rosenthal, president of Meredith Management, which is developing Fenway Center, a predominantly residential development that will also have 100,000 square feet of retail space, said despite an initial agreement, local grocer Harvest Co-op Market opted to no longer be part of the complex due to recent changes in Fenway’s competitive marketplace. Wegmans is expected to open in nearby Landmark Center in Fenway and a Whole Foods opened earlier this year on Beacon Street, close to Kenmore Square.

“Unfortunately there is no room left for a small, local grocer like Harvest to survive with these out-of-state giants competing for the supermarket customer in the Fenway area,” said Mike St. Clair, general manager of HarveSt. in an email interview.

HarveSt. however, just opened a long-awaited 9,000-square-foot location at Arboretum Place in Jamaica Plain, and St. Clair said the grocer is in discussions with the developers of Bartlett Place in Roxbury to potentially be included in that project.

Rosenthal said he seeks retail tenants that complement the expected shopping demographic of an area. In the case of Fenway Center, he is looking for “independent type retailers versus large box national chains.” The first phase of the 27-story building with 420 apartments that will also house about 60,000 square feet of retail is expected to open in 2016. He stressed that the right mix of retailers is “critical” because they support the residential; such tenants will include a dry cleaner, a pharmacy, coffee shops and convenience stores.

“There has to be some sort of vision for the space – it’s the difference between a really good recipe and one that isn’t,” Rosenthal said. “There’s a chemistry involved among the users in any community. The tenants need to mix in a positive way.”