Tenavox Blog

    The Latest Resources, News and Events Curated by our Team of Commercial RE Experts

     

    Written by Josh Feinberg
    on August 12, 2017

    What should retail owners and decision makers be looking for in their lease spaces?

    Finding space in general is hard, but we’ve covered that in an earlier post on how to streamline the process of making that initial “cut” on potential locations, from 1000 buildings and centers down to manageable 10-15 retail locations you actually want to tour.  

    This post is about what's important to retailers. Time to turn you into a retail site selection pro!

    That first cut is of uber-importance.  If done correctly your search becomes efficient and your process infinitely smoother. If not done correctly, strap in for a rollercoaster of poorly fitting buildings, frustrating and convoluted tours, and a confusing lease process.  So what can we do to really amp up that first cut on the retail side? 

    shutterstock_404811838

    Demographics, Traffic and Co-tenancy….oh my!

    The old way of thinking about retail locations still rings somewhat true. Locations can be broken into pots, those pots defined by preferred demographic factors and hopefully bolstered by positive traffic numbers. Bonus points for co-tenants that a retailer may have synergy and previous experience with.  But these factors are based on data that is hard to find, and  is often outdated. So how do the big boys pour gas on the fire and make sure their locations are going to hit sales targets?  Simple: they plan.

    I love it when a good plan comes togeth...uh wait!

    Chain and larger retail entities spend a massive amount of time breaking down what demographic factors, traffic dynamics and other retailers do to impact their bottom line. So how can a small business level the playing field? Let’s start with demographics.

    Demographics as a whole are done properly only once every ten years during the US Census (yes it’s the government so “properly” is debateable). The census tracks population and allows anyone who cares to take the time to start predicting trends, forecasting and make assessments for their home or business related to how people are living, moving and doing economically in a given area. The data is freely available. Here are some good sources:

    Premium Sources (cost money)

    www.stdb.com (STDB = "Site to do business") This is a retail-focused mapping product that many large brokerages use, fairly effective, reasonable costs.

    Esri Demographics (Esri retail data) Everyone in retail knows esri, they’re finally leveraging their massive data, somewhat costly but advanced and user-friendly tools here.

    Sites Usa: Another competitor in the space, very retail focused, middle of the road costwise with extra tools for users that can be useful (radius mapping, etc..)

    Free Sources:

    US Census www.census.gov  An obvious one here, all that data, takes time to mine your way through it but free and helpful. Can be outdated as discussed.

    SBA.gov  Another government source but packaged in a way friendlier to small businesses.

    DataUSA: A Visual tool for interpreting demographics, quite friendly and created by major tax accounting and consulting firms for businesses.  

    Data overload...help!

    So, all of these sources can help you find out what the demographics of a given area are...but what about how those factors impact your industry specifically?  Well, doing a breakdown of your own sales by zipcode is incredibly helpful with this. By pulling out your own sales  data you'll be able to use this to make predictions in other areas. Find the same type of consumer in a different area, build a profile and search the above sources.  

    Need help breaking down your industry further?  I like www.bizminer.com as a resource. They track business reporting across 400+ industries and can help you find out what standards and metrics in your industry are applicable to you.  True, that’s a lot of data, but I promise you that large retail chains are using this level of scrutiny and planning to make real estate decisions. So should you!

    Now, on to traffic.

    Traffic sucks. Literally.

    shutterstock_110041646

    Traffic has become a bellweather in the industries for retailers to put their finger in the air and decide whether one center is “better” than another.  Now, there are several issues with traffic. One, traffic does not indicate FOOT traffic, e.g. people actually stopping and using the stores. It just indicates number of cars, period. It’s a useful metric for city-planning, civil engineering and maybe even construction/land speculation but I question it as an effective retail decision metric. That being said, if you must look at traffic here are my favorite sources:

    If you really want the best data, INRIX is the premium solution of choice, they supply many of the premium consumers in the space.

    For free, traffic data is usually available using your local department of transportation or economic board or chambers of commerce. Ask your local chamber for their latest analysis. County planning boards are incredibly helpful (and often free) sources for this data as well. These are dependable albeit a bit old-school.

    Let’s talk about a more contemporary 2017+ way of looking at traffic.

    For retailers, knowing where people are shopping or “checking in” socially is a far more powerful tool than knowing how many cars drive by a potential location.  I’m talking about social data.  There are aggregators of massive data that track us everywhere we go, shopping to eating to driving and back again. The smart retailers are leveraging this data.  

    Want to know how many people are visiting a center on a monthly basis? What their consumer behaviors are like in the region? What triggers an in-store visit versus an online sale?  This may sound a little Orwellian, but I promise you this data is already being collected by your competition so you might as well start it, too.

    A great source for this is Facebook, which bought a little company called FourSquare some years ago. What made Foursquare interesting is that they track people by letting them gamify their “check ins” and rewarding people for letting them know their location.  The system is obvious. They have collected over 1 billion checks-in this year alone in the United States. Now we know where the consumers are hanging out.

    Another great source of location analytics is Google. Google tracks location through its Google Maps platform and Analytics dashboards.  Not only that, they provide up to the minute search trends for your prediction-heavy retail needs.  

    It’s time for 21st century traffic, and to leverage this data in your real estate decisions.

    shutterstock_195719315

    The black hole….filling the void.

    The last piece of our real estate decision puzzle is co-tenancy and spacing.  Having synergy with other potential retailers (even competitors) is fast becoming the most popular route.  As online shopping changes the way retailers compete (smaller stores, more unified product delivery systems) retailers need a new way to combine their efforts.  

    The old approach of staying away from competition and “spacing” your way to success is outdated now. Consumers already have millions of choices, so the smartest retailers are providing customers with the sort of benefits that online shopping can never accomplish. One-stop, convenience and speed for those “instant” purchases.  

    Retail developers are also more mindful now of tenant mix in their leasing and development. While massive chain tenants may be granted some exclusivity, often it is up to individual owners to decide how many “alike” stores and eateries are granted leases in a given project.  This isn’t great. When things get tough I promise you that “mix” and a developers “commitment to diversity of tenancy' is going straight out the window.

    So how do you know where are the best locations for your business? Well, if you’ve been following along with earlier posts, you determined the demographic breakdown of your most popular consumer and you know the consumer traffic dynamics of a particular area. So what’s the last step?

    A void analysis!  "Look for places your customers are, but which you do not yet have a location." Comparing locations where they do other activity, and match it to demographics you already know about your customers to find an effective "next" spot to put a store. 

    This sounds daunting, and a little weird...but it's extremely valuable. Identifying those co-tenants you have had success with and mapping their locations is supremely useful.  On the other side of the coin, making sure you are not cannibalizing your current stores with locations too close to each other is equally important.

    So how do you get this void analysis?  Simple, use Google Maps.

    Yes, there are premium sources you can pay for. But with a little elbow grease you can complete your own.  Google maps holds most businesses in its database and plots these on its maps, for free and on demand.  Just do multiple searches and take some screenshots.

    With a quick overlay you can compare your potential locations you’ve identified by size, budget, quality demographics and consumer traffic...to what currently exists in the market. It’s the last step in making a good real estate decision. Making sure you are within striking distance of capturing these consumers you’ve worked so hard to identify.  (If you must use a premium source, they will be happy to charge you to do the work I described above that you can do yourself for free)

    So, that’s the three steps to really amplifying your retail searches for space and great locations.  Think like a big guy, even when you’re a little guy and hey, you make wake up one day and be pretty darn big too.  

    Oh, and join Tenavox! We have resources for all of this, in one package, 100% free for Tenants. Guess I should have mentioned that earlier….;)

     

    Let Us Know What You Thought about this Post.

    Put your Comment Below.

    You may also like:

    #Austin #Buying #CRE #Cretech #Houston leasing startup Startups Tenants Tenavox

    Commercial Tenants Ask Tenavox...Should I Buy a Building Instead of Leasing?

    To Rent or to Buy? Seems like we get this question alot...

    leasing #realestate small business Tenants Tenavox

    What Being a "Tenant" Really Means: The Importance of Knowing Key Leasing Terms

    Editors Note: This has been updated for 2019! There are a bevy of commercial real estate terms that can be super confusi...

    Insider commercial real estate #CRE leasing Tenants Tenavox

    Weekly News Roundup

    Welcome to the Tenavox Weekly News Roundup!