Any real estate transaction, including selecting a business site, must pay close attention to the property's location. You must carefully evaluate your company and logistical requirements, study a variety of data sources, and determine the best place for a brick-and-mortar establishment.
By offering actionable insights for every location or venue with unparalleled precision, foot traffic data enables companies and real estate professionals to make the best site selection decisions. Making informed judgments and developing a successful site selection strategy can be achieved by taking into account foot traffic insights and trade area analysis during the site selection process.
What is commercial real estate site selection?
The process of choosing a suitable physical location for any company or activity having an offline component is known as site selection. A real estate company or a corporation's real estate department often oversees the site selection process, including engineering and construction experts, leadership team members, business analysts, and even the tax and accounting unit.
A wide variety of quantitative and qualitative inputs will be analyzed, and the site selection team will establish selection criteria to find prospective assets that will help the company position itself to fulfill its long-term objectives.
Investing in a comprehensive site selection process takes a lot of work, but the benefits can be tremendous. By optimizing consumer reach and commercial potential, businesses that examine logistical considerations and the proposed location's market and submarket features set their sites up for success.
Incorporating location analytics into your evaluation can streamline practically every stage of the commercial real estate site selection process, whether you're considering your next location, a franchisee considering where to put your investment, or a developer looking for locations for your next project.
Footfall data analytics
You can read our previous post on the importance of footfall analytics here.
Companies specializing in location data, such as Unacast, offer a range of visiting information for specific locations and whole areas. These metrics can provide data on customer visitation-related issues, such as the number of people who frequent each site, their preferred days and times, and the other places they typically go.
Foot traffic data may be used in conjunction with other data sources to yield even more insightful results. A complete view of the site's current offline performance and its potential may be generated by layering other reports on top of location data, including trade area analytics. Commercial real estate site selection is more accurate when combining multiple sources.
Trade area analytics
The geographic distance from which retail consumers originate is known as a trade area. Foot traffic may be used to gauge the activity in a trade area, also known as the vicinity of a location (venue, neighborhood, etc.), which is made up of all the residences of those who frequent the location.
Analyzing trade areas entails determining where customers reside and how far they are likely to travel to a specific location. Information on changing visiting patterns is helpful for gauging client loyalty.
The measurement and evaluation of trade areas are being redefined by location data technology. Real estate agents may now quickly map out the true trade area for any commercial property and determine where the actual source of visitors is. This approach to calculating trade area offers a far more precise and detailed representation of a company's client base.
When determining the value of the commercial real estate and retail space, it is essential to consider foot traffic at a specific location, including the number of visitors, the types of visitors, and the characteristics of the visits (such as when visitors arrive, how long they stay, and how frequently they return).
Psychographic and demographic data
While local consumer trends and behaviors continuously change, every community has a different social fabric subject to ongoing change. A range of approaches, such as performing consumer-conducted surveys, monitoring social media conversations, or even analyzing local online searches, are used by several datasets to offer visibility into customer preferences.
Teams responsible for choosing suitable locations will probably benefit from learning more about the area's demographics. A full description of the local population may be found in sources like the U.S. Census or STI PopStats, which include information on age, gender, marital status, ethnicity, income, education, employment, and more.
Other demographic tools separate households according to numerous demographic characteristics to provide a view of the consumer profiles in your region of interest.
Businesses may predict future demand and market share by looking at where consumers spend their money. A general summary of how consumers arrange their spending in each place is available from STI Spending Patterns. Commercial real estate site selection strategies must look at the potential of a location and how consumer trends are changing in that area.
How do these techniques help with real estate site selection?
Using the techniques outlined above, companies can improve the commercial real estate site selection process in the following ways:
- Understanding who your customers are
Footfall data and trade area analysis help you understand how accessible a location is for the customer base. For estate, in commercial real estate site selection, is your location selling what the people want to buy?
When selecting a site, data helps you find a location that can optimize performance amongst your other stores or the competition.
- Geographic area
Foot traffic, mobility, and demographic can pinpoint other factors that may impact the performance of a brick-and-mortar site. For example, there could be train and bus routes nearby that affect the customer base. You want to select a location with the greatest potential, and widening your scope to include other factors gives you the best chance of success.
During site selection, also consider what other businesses are in the area. It would help if you placed your building near complementary stores and ones that make sense depending on the customer base. There would be little value in establishing a gardening store near high-rise buildings without gardens.
Effective real estate site selection requires some benchmarking. If you have other physical stores, you can compare the data to those stores to understand which factors appear to be helping or hindering them.
Get started with real estate site selection
Book a meeting with Unacast to see how we can deliver innovative and dynamic demographic, location, and trade area data. Work with a team of data scientists to get the perfect view from one of the most accurate sources in the industry. If you are ready to level up your data game, speak to Unacast today.