Site Criteria for Retail Operation by JM Padron

Site Criteria for a Retail Operation. Real Estate represents a very important variable of a retail operation. Most of the business owners tend to focus primarily in economics without taking into account other relevant factors. These factors are measurable and the matter of the fact is that they can be identified and quantified. The location, depending on the type of store: the first thing to determine is the Site Criteria, which includes demographics, sales per square feet, radius of influence, traffic count, co-tenancy, parking, access/egress, signage, permitted use and exclusivity. Examples of Site Criteria: 1. Pad, end cap, or out-parcel with drive-thru is preferred Strong visibility, easy ingress and egress access and ample parking 600-1,800 square feet with a minimum of 20' of frontage Strong national/regional co-tenants, both food and retail Outdoor seating strongly preferred. 2. Traffic Count: > 30,000 Cars Daily Employees (3 Mile Radius): > 40,000 Population (3 Mile Radius): > 50,000 Average Household Income (3 Mile Radius): $60,000 Proximity to XXX Burger, Adult Casual Burger, & Fast Casual Competitors Size: Typically 1,600 – 2,200 Square Feet Building Type: End Cap / In-Line Location Parking: Minimum 16 Spaces, Preferred 20-25 Seating: 40-70 Interior with Exclusive Patio as Available Full Dress Trade Package and Signage Construction: Electrical: 400 AMPS (120/208 V) Gas: 2.5″ Gas Line, Minimum 2 Million BTU Water: Per Code, 1.5″ Service Minimum Grease Trap: Per Code, Installed HVAC: 1 Ton per 150 SF, Approximately 10-12 Tons As we can see the second example it is a more complete Site Criteria, the more detailed the better. Site Criteria Analysis, based on the Site Criteria, an in depth demographic analysis, traffic analysis and gap analysis must be performed. The gap analysis consist in determining the actual sales of the specific good(s) within the radius area and obtaining the expenditures of the particular good(s) within the same radius of action. This will determine if the location is feasible for that particular business. Marketing considerations, the business owner must weigh the incidence of marketing/advertising for the potential location. Good exposure, good traffic and desired co-tenants vs. Not such good traffic nor exposure. This will lead to a financial decision, and general better exposure location higher rent, not such a good exposure location, lower rent which would be associated with higher marketing/advertising costs. Financial considerations, once the short list of locations has been determined, a Lease vs Buy Analysis and a Financial lease comparative analysis must be performed. Factors to be watched in the leasing process: Rent abatement and rent escalation, Operating expense pass-throughs Tenant improvement expenses and allowances, Options (renewal, expansion, contraction, cancellation), Add on factor (rentable vs. usable square feet) and Relocation costs. Businesses should retain a tenant representation Broker. A tenant representation broker will calculate the alternative (the true cost DOES NOT equal rent) and will ensure that important qualitative factors are also considered. For more information contact JM Padron, CCIM at jpadron@remax.net or 954-868-5863