Summary: How can you tell a “magic” site from smoke and mirrors? Commercial real estate specialists swear by various site selection tools, and a new platform appears to come up every year, promising to be better than the last. Find retail marketplaces using these steps.
During the development process, commercial real estate experts will swear by a wide variety of site selection tools, and it seems like a new platform appears every year that promises to be better than the last one.
How then can you tell what will genuinely produce that “wonder” site and what will turn out to be nothing more than smoke and mirrors?
Take these foolproof steps to find the best markets for your retail assets rather than concentrating on any particular program.
Use The Macroeconomic Factors As A Guide.
Utilize a demographics research tool to first collect the following metrics to prioritize your important markets: population demographics, population growth, unemployment rates, cost of living, utility expenses, wages, tax rates, total retail GLA, and consumer spending.
Find the commercial zones that provide the best solution to your necessary criteria, and then rank them in order of priority according to the barriers to entry and other aspects of competition. The following step is to conduct a thorough location analysis using location analytics, also known as the process of quantifying a location, to gain a valuable perspective of the neighborhood surrounding a piece of property and to ensure that the necessary data is gathered for a well-informed decision. To delve into additional specifics, analyze the sales volume generated by the existing retail tenants located in close proximity to the prospective site.
Having ties with industry brokers who are familiar with the market from personal experience is also beneficial. Consider partnering with an experienced developer who will indeed have a vast network of people you can call on if you don’t already have one.
Examine The Many Categories of Consumers
When it comes to the typical client profile of that region, you should put your attention not only on the macroeconomic component of the median income level but also on the average amount that customers spend. This is crucial since shopping behavior can still be somewhat different even across populations with comparable demographics.
Take it a step further by looking for recent community surveys asking residents what they want in that region and bringing those results to light. When conducting market research, it is important to keep in mind the number of potential residents living in the area around the location. Is there a plan to construct any extra homes in this neighborhood? There may be tax incentives or opportunity zones that should be considered, and this may vary according to the type of housing and the community’s economic climate.
Compare Levels of Competition
If you are a retailer, your first instinct may be to steer clear of oversaturated areas for your kind of store, but you shouldn’t immediately write them off as unprofitable opportunities. A healthy market should have a reasonable amount of competition. However, this theory is most successful in practice when there is sufficient demand to satisfy everyone’s needs.
For instance, certain tenants will be required to maintain a specific distance from other businesses or maintain a certain distance from current establishments in order to prevent cannibalization. On the other side, some tenants actually desire to be closer to their competitors if they believe they are superior operators and can out-position them within the trade area. This is the case when the tenants believe they can out-position their competitors. For illustration’s sake, the appearance of a Dunkin’ Donuts outlet in close proximity to a Starbucks is not at all unusual.
Begin By Measuring the Distance from Your Current Operations
Consider the current structure of your supply chain when deciding the optimal distance between points of origin and destinations. Considering that all of your locations are currently along the west coast, does it make sense to expand into the east coast at this time? Or, should you make a steady shift to the east by initially penetrating areas in the Midwest?
Keep in mind that every project is unique, just as every municipality is also diverse. Don’t think of it as a solution that everyone can use. Here are some other errors that should be avoided.
Partner With an Experienced Site Selection Team
Because there is so much more to site selection than can be put into words, you might want to outsource the task to an experienced developer who knows exactly what to search for. They will inquire you who you believe to be the most significant competitors so that they can modify the site selection criteria in accordance with your perceptions.
Before making a hiring decision, the answers to the ensuing queries should increase your level of confidence.
In addition to that, the group ought to make use of a weighted model. This will rate each possible location based on a combination of qualitative and quantitative considerations, such as the labor market’s scalability, the workforce’s demographics, the cost of living, and the operational costs. Tenants who choose to manage their own properties may focus solely on considerations such as transportation, human capital requirements, and other aspects of market dynamics study. However, rules, hurdles to entry, and other tenant-specific advice are also significant aspects to consider.
Tenants should utilize various strategies, including those discussed above, when going through the site selection process. Alternately, you may think about employing an experienced developer who would already have access to all of these strategies in addition to others.
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