Real estate site selection can be a complex web of evaluating store attributes within a potential store business area. The process uses a science and an art to the overall selection process that combines a number of factors that weigh on the viability of the location. What complicates the process is that each location has its own special attributes, making site selection more directional in nature rather than a cookie-cutter process. With that being said, here are some key attributes to consider in the overall assessment:
traffic counts – While these are clearly site-specific (think of the difference between a rural site and an urban site), analyzing traffic counts will help provide volume predictability. The key is to understand what the potential traffic patterns are for the site before one can just look at the traffic counts. If a road carries a number of cars, but that road does not reach the site well, the traffic counts may be misinterpreted. Understand the natural flow to the site before evaluating traffic counts. One way to get some perspective on how traffic counts mirrored volumes is to compare your existing site’s volumes to your traffic counts. Many operators jump right into selecting new sites without re-looking at existing sites and creating a model based on their geographic areas. This can give you a more reliable predictive model for your future sites.
population counts – Population count is the next logical indicator of your location. You don’t just want to see the population count as it stands today, and whether it’s enough to support a site, but also how it’s been trending. Positive growth indicates a viable market, while negative trends can raise a red flag. Additionally, gaining a better understanding of ethnic and socioeconomic trends in the area of commerce will provide a better snapshot of the marketing mix to present on the site.
Seasonality and geographic nuances – Determine whether or not the site is seasonal should be taken into account in your analysis. Operators shouldn’t necessarily shy away from seasonal stores, but shouldn’t be surprised after they open. Closely related to seasonality would be a commercial area controller, ie a mall or theme park, which can positively or negatively affect your store’s performance. Tracking these external forces will strengthen your model. Also, look for non-seasonal improvements or barriers to your site. A river dividing your business area, for example, will effectively cut off your traffic to the store no matter how close the houses are. Even certain companies can affect your site. A large manufacturing facility releasing a number of employees at the same time can cause traffic flow bottlenecks that will cause potential customers to avoid the area at these peak times.
visibility – This may be more anecdotal than the other attributes, but should still be a consideration. Judging whether the site is easily seen from afar rather than a site that is hidden by overgrown trees should be a factor. Driving the site from all four directions allows the owner to get the perspective of potential customers as they approach the location. Other considerations would include the speed of the traffic as it approaches the potential site. If traffic flow is traveling at too high a speed or drivers are distracted by complicated traffic patterns, the chance of noticing your location is diminished.
Competitors – Obviously, understanding the competition within the commercial area is essential. I would approach this competitive assessment in a three-pronged way: a) gasoline, b) convenience stores, and c) quick-service restaurants. Look at the competitive landscape in degrees of competition, which means that some competition has a greater negative impact than other competition. Ranking your competition based on this impact for all three categories will paint a more holistic picture. Keep in mind that some competitors may only have an impact on gasoline, while others may have a greater impact on sales of convenience products. With the convenience store industry moving deeper into foodservice, mapping quick service restaurants in the retail area will give you a better indication of the viability of your foodservice operation.
Rent – Rent, rent, rent. There are many factors that come into play when choosing the best location. Is it a first corner? What part of the day side of the street is the site? Is there easy entry and exit in and out of the location? Are there divided highways in front of the location that make access difficult? Is this an interior lot location and not even a corner? What is the length of the front of the property? There are a lot of considerations for the actual location of the site that need to be evaluated in the context of the other attributes.
Let’s be honest; There are a number of variables that come into play. While you can’t be sure that accurately representing all of these attributes in a real estate site appraisal model will guarantee success, it will at least put you in a better risk-averse position. That’s the science of it.
I’ve been around the block long enough to know that some stores just defy their science and just work. The art of site selection is much harder to quantify than the science. While those stores are the anomaly, evaluating new locations by putting their attributes to the litmus test above helps minimize the downside risk of opening an underperforming location.