The Ultimate Guide to Retail Site Selection

Retail site selection is a subset of the broader discipline of commercial real estate site selection. It follows a multi-step, systematic approach to identify the best possible locations for new brick and mortar retail locations. While historically a slow, somewhat subjective art, the process has become exponentially faster and more effective in recent decades. This is largely thanks to the introduction of powerful retail site selection software and statistical models. Now, site selection is considered an indispensable part of the real estate hunt for any savvy retailer.

In this article, we will explain the steps involved in the retail site selection process. We will also demonstrate how, when executed by an experienced professional, this process will:

• Ensure your store’s location aligns with your target market

• Ensure your store has efficient access to supply lines and infrastructure

• Support and advance your business goals

What Criteria are Considered During Retail Site Selection?

Many factors need to be weighed in tandem to determine a site’s quality for a given retail operation. While each search can have different priorities, almost all of them will include these criteria as part of a comprehensive assessment:

• Location

• Markets

• Trade areas

• Sites

• Accessibility

• Proximity to suppliers

• Connections to roads and public transit

• Existing foot traffic

• Consumer Demographics

• Age

• Income level

• Population density

• Lifestyle

• Values

• Purchasing habits

• Competition

• Proximity to existing businesses

• Local demand

• Total Costs

• Rent

• Taxes

• Utilities

• Maintenance

• Staffing

The 3 Stages of Retail Site Selection

The retail site selection process generally follows a ‘narrowing’ approach. This means a broker will start with a relatively large geographic areas, then refine their focus down to individual sites. This refinement process typically takes place in three stages.

Stage 1: Market Identification

A ‘market’ is typically the largest geographic area analyzed during the site selection process. Markets are commonly defined by cities and their surrounding communities. Multiple markets may be analyzed to determine which will provide the best opportunity. Optimal markets are identified by analyzing macroeconomic factors, such as:

• Population growth

• Employment rates

• Consumer spending.

Stage 2: Trade Area Identification

A ‘trade area’ is the geographic range from which a retail business can expect to draw the bulk of its customers. These days, a trade area is most often defined by the total drive time required to reach a specific building, complex, retail district, etc. At this level, analysis focuses on factors like:

• Local competition

• Demographics

• Consumer concentration

• Trade area overlap

• Performance estimates

Stage 3: Site Identification

Finally, for each optimal trade area that’s identified, a search for optimal sites can be conducted. This is when specific property requirements come into play, such as: 

• Cost

• Square footage

• Parking availability

• Site visibility

• Site access

Supporting infrastructure, services, and business conditions will also be considered at this stage. This analysis includes factors like:

• Existing cotenants

• Neighboring businesses

• Traffic volume

• Traffic flow

• Zoning requirements

The Modern Retail Site Selection Process is Data Driven

One of the unifying elements for all three stages of retail site selection is the critical role of quantitative data. Historically, analysis was frequently hampered by the time and effort it took to collect, process, and compare data from so many different variables. Fortunately, data analysis software is now readily available. This technology allows commercial real estate brokers to quickly compare hundreds of variables across multiple markets, trade areas, and site locations. It’s a more comprehensive approach that ultimately leads to stronger, more accurate site recommendations. 

But as powerful as these tools are, they still require an experienced professional to get the most out of them. For best results, working with a seasoned commercial real estate partner is essential. A partner like Modern CRE.

We’ve helped countless retailers find their ideal storefronts over the years. Whether you’re opening your first location or your fiftieth, our detail-oriented, tenant-centered approach helps ensure you’ll find a great property where your business can flourish and grow. Connect with our team today to learn more about working with Modern CRE and to start your retail site selection process.