Strategic process for site planning
Real estate site selection can be a complex web of evaluating store attributes within a potential store business area. The process uses both a science and an art for the overall selection process that combines a number of factors that weigh on the viability of the location. To complicate the process, each location has its own special attributes, making site selection more directional in nature rather than a cookie cutter process. With that said, here are some key attributes to consider in the overall assessment:
Traffic counts – While these are clearly site specific (think about the difference between a rural site and an urban site), analyzing traffic counts will help provide predictability of volume. The key is to understand what the potential traffic patterns are for the site before you can just look at the traffic counts. If a road carries multiple cars, but that road does not fit well into the site, 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 reflected volumes is to compare the volumes of existing sites with your traffic counts. Many operators jump right into the selection of a new site without looking back at existing sites and without creating a model based on their geographic areas. This can give you a more reliable predictive model for your future sites.
Population counts – The population count is the next logical indicator for your location. You don’t just want to see the population count as it is today, and if it’s enough to support a site, but also how it’s been trending. Positive growth indicates a viable market, while negative trends can generate a red flag. Additionally, gaining a better understanding of ethnicity and socio-economic trends in the business area will provide a better snapshot of the mix of merchandising that needs to be featured on the site.
Seasonality and geographical nuances – Determining whether the site is seasonal or not should be a factor 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 driver of the commercial area, that is, a shopping center or theme park, which can positively or negatively affect the performance of your store. Tracking these external forces will reinforce your model. Also, look for non-seasonal improvements or barriers on your site. A river that bisects 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 plant that releases multiple 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 it still needs to be a consideration. Judging whether the site can be 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 gain perspective from potential customers as they approach the location. Other considerations would include the speed of traffic as it approaches the potential site. If the flow of traffic travels 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-fold way: a) gasoline, b) convenience store, 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 the three categories will give a more holistic view. Be aware that some competitors may only affect gasoline, while others may have a greater impact on convenience product sales. With the c-store industry moving further and further into foodservice, mapping quick-service restaurants in the commercial area will give you a better indication of the viability of your foodservice operation.
Rental – Rent, rent, rent. There are many factors that come into play when choosing the best location. Is it a first corner? In what part of the day on the street is the site located? Is it easy to get in and out of the location? Are there divided roads in front of the location that make access difficult? Is this an indoor lot location and not even a corner? What is the length of the property’s facade? There are a lot of considerations for the actual location of the site that must 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 can guarantee success, it will at least put you in a better risk-averse position. That’s the science of it.
I’ve been on the block long enough to know that some stores just defy their science and just work. The art of site selection is much more difficult to quantify than science. While those stores are the anomaly, evaluating new locations by putting their attributes through the previous litmus test helps minimize the negative risk of opening an underperforming location.
