What is Site Criteria in Commercial RE? by JM Padron, CCIM, MRICS

By
Commercial Real Estate Agent with THE JMTEAM NETWORK BK3212919

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 quantitative and qualitative 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.

 

3. MAJOR METROPOLITAN MARKET PREFERENCES

    Traffic Count: > 50,000 Cars Daily

    Employees (3 Mile Radius): > 75,000

    Population (3 Mile Radius): > 75,000

    

    SECONDARY MARKET PREFERENCES

    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

    

    SITE CHARACTERISTICS

    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 MINIMUMS

    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

 

 

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

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Comments (1)

CA COASTAL ESTATES Lauren Selinsky Perez CRS
California Coastal Estates - Aliso Viejo, CA
"Your Real Estate Broker" #oclauren

Site criteria is crucial in decision making for Clients for retain industry. Great points! 

Jul 02, 2016 04:34 PM