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
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
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 email@example.com or 954-868-5863