Site Selection
Site selection is the first step of the lease process that needs to be taken seriously. There are several components that make up the bulk of the site selection process, such as demographics, driveby traffic vs accessibility, rent rates, and multiple trade areas.
Target Demographics
Through analyzing your current portfolio’s demographics or portfolios of other similar successful businesses in your industry, you can ascertain the variables that make the most sense for your next location. Using these variables, you can avoid areas that may present populations that do not have the propensity to utilize your services.
The two most important demographics are population density and income. These numbers vary widely from region to region, so the best method is to compare these numbers between your potential target sites.
It’s better to use someone on your team or a broker you trust to find the most accurate numbers than to rely on the promo flyers.
Take radius into account, too. The site may have fantastic 5 mile demographics, but if your customers don’t travel more than 2 miles to come to your location then this may not be relevant.
Drive By Traffic vs Accessibility
There is an inverse relationship with drive by traffic and accessibility. While drive by traffic is great and creates exposure for the building, too much of it starts to impede the accessibility to the building. The right balance depends on the needs of the tenant.
Competition
Understand your competitors’ services, hours, convenience of location, and reputation in the community. Factors like these allow you to analyze the quality of competition and find ways you can either avoid legitimate competitors or out-position poorly positioned or poorly operated locations.
The best tool is Google Maps for two reasons: finding the locations and looking at their reviews. Google automatically keeps business information updated so you can get a street view or pictures of the inside. When it comes to reviews, many businesses are under performing. Competitors that have less than 3.5 star averages are ripe for disruption. Likewise, those with 4.5 stars or higher will be hard to compete with.
Physical Site Characteristics
Sites that are easily accessible are not only convenient for your customers, but also for your staff.
Be wary of:
-Obstructions to visibility from the roadways
-Parking limitations
-Obstructions to signage visibility
-Walkability
While there are certain things that can be controlled in some situations (parking and site design), most of these physical characteristics are permanent.
Careful diligence is needed to make sure your site meets your requirements, if feasible.
Market Strategy
Establish a five to ten year timeline for growth based on the market. A town of 50,000 might be able to support a second or third location, where as city like Dallas might be able to support 40 locations.
Trade Areas
Real estate changes every day. You may have a site that meets all the criteria in terms of demographics, drive by traffic, competition, anchor tenants, etc but nothing is available. A month later, something could be available. If you're goal is to open two or three new locations, establish 6-8 trade areas to choose from.
If you need help finding the perfect location email us at podcast@leadersre.com
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