How many times have you heard people mention the most ubiquitous phrase in all of real estate – Location, Location, Location? If you are scouting a location for a new retail or restaurant business you need to understand something which may surprise you: these three words mean three different things.
Picture a bull’s-eye consisting of three rings ranging in size from large to small when you think about Location, Location, Location. The large outer ring represents the general area surrounding a retail store or restaurant. The middle ring represents the site itself. The small inner ring represents the actual space or building which a business occupies.
While most people are capable of selecting a good area for their business many don’t understand why it is even more important to select both an outstanding site and an outstanding space. Being able to consistently pick all three types of locations is what will have a significant impact on the future success of your business.
For most people, identifying a desirable area is an easy first step. Think about a busy road, street, or highway – one where there is a significant cluster of retail and restaurant businesses, as well as offices, banks, and convenience stores.
Next, you want to learn about the demographics of the surrounding area. How many people live here? What kinds of incomes do they have? What are their age groups and education levels? Are homes here expensive, modestly priced, or very affordable?
For convenience oriented businesses, demographics for either the 1-2 mile ring or a 3-7 minute drive time are recommended. For destination uses, demographics for the 1-2-3 mile ring or a 3-7-10 minute drive time are more appropriate.
The second step is where the hard work begins. Here, you need to focus your attention on finding the right site. If you are thorough, you will end up looking at a lot of real estate over an extended period of time. This is where doing your homework is very, very important.
In the process of conducting your research, you will begin to weed out the weak sites from the strong sites. As a result, you will end up with a short list of potential sites. The best way to create your short list is to determine if a particular site passes the PASTA V test.
Once you have completed this important exercise, the next step will be to find the right space. This is not an easy task. This is where you will need to examine critically important factors such as building setback, building frontage, building depth, window area, storefront signing, and curb appeal.
The easiest way to evaluate and compare individual sites and spaces is to create a Scorecard. What are a site’s positives? What are its negatives? Ask yourself the same question when it comes to space.
When filling out your Scorecard you want to assign a number, a score, to each evaluation item. Because “numbers don’t lie,” this important exercise will help you determine which sites and which spaces you should pursue and which sites and spaces you should eliminate.
By taking a disciplined, systematic approach to Location, Location, Location you will eliminate guesswork and look at real estate from an objective perspective. In the process, you will be much more capable of identifying “home run” locations – the kind you need if your business is going to get off to a strong start and become a success story.