May 28, 2020  
 
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Market Analysis

Written by Brent Pace for Gaebler Ventures

If you are considering a retail venture of any kind, you will want to get a good market analysis before picking your location. Here are a few ideas for a do-it-yourself market analysis as well as options for purchasing one.

If you are about to develop a retail venture, location is everything.

Market Analysis

You need to find a way to get your product in front of the right people. And hopefully, you will get your product in front of a lot of the right people. To do this you need to conduct a market analysis to see if a site fits your needs. In this article we will investigate a few options for conducting a market analysis under different circumstances.

Do-it-yourself options for existing properties

1. Ask the owner for percentage rent history. In many retail complexes the owner will receive part of his revenue as percentage rent from tenants. This means that he shares in some of the tenant's revenues when they hit certain benchmarks. This type of information could help you get an idea of what sales are in the complex. The information may be difficult to get, but it doesn't hurt to ask.

2. Talk to Managers of existing stores in the complex. You would be surprised what you can learn just by walking around and talking to the manager of a store in the complex. Managers of chain retail stores can be highly competitive with one another. They will know how many stores are in the market, and where their store ranks in terms of sales performance and other metrics. Go ahead and get to know a few of these managers and see what you can learn!

3. Talk to the customers. This is the number one rule of marketing. Always talk to your customers! Unless your store creates new traffic, the existing customers will be yours. Talk to them and see where else they shop, why they come to that specific retail center, what they like about it, what they don't like, and more. The customers, especially long-time customers, will be incredibly insightful as to what is good and bad about a certain complex.

4. Check the local municipality's website. You can find out a lot about the demographics of the area from the local municipality. Most cities now have demographic information on their web site. Be sure to utilize this information, especially if the complex is part of a small suburban city. This is free data to you that may be informative in telling you if your type of customer lives close to the center.

5. Use Google Maps. This one may seem silly, but it's a surprisingly powerful tool. On a Google Map you can simply type in an address and then look for certain things near it. For instance, you can type Churches near San Francisco, CA and get a huge list of churches in the area with the first ten on the map. This can be incredibly useful if you are locating in a new market. You can save yourself hours of driving by getting the lay of the land early from Google.

6. Talk to your broker. Don't forget to talk to your broker. He will have access to information on other deals and will be able to provide some good information.

Professional Options

The most sophisticated market analyses will require hiring a professional firm. You can find them in almost any city, and they will give you hard data on traffic counts (both automobile and pedestrian), demographic rings, income rings, and much more. These surveys are awesome, but can be incredibly expensive, especially if you are not developing the complex yourself but just looking for space. But it doesn't hurt to talk to a few of these folks and ask to see what information you can get. You never know if there is something already drawn up that you could purchase at a reduced price.

Brent Pace is currently an MBA candidate at University of California at Berkeley. Originally from Salt Lake City, Brent's experience is in commercial real estate development and management. Brent will have tips for small business owners as they negotiate their real estate needs.

Related Articles

Want to learn more about this topic? If so, you will enjoy these articles:

Amortization in Real Estate
What is a Cap Rate?
Basics of Valuing and Acquiring Commercial Real Estate
Keys to Financing Your Development Project
Modeling Your Real Estate Loan in Excel


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