Retail Sales Model Valuation

Retail Sales Valuation Model Project

Gary M. Ralston, CCIM, SIOR, CPM, CRE, SCLS Coldwell Banker Commercial Saunders Ralston Dantzler Realty 863-877-2828 [email protected] Jeff Engelstad, Ph.D., CCIM University of Denver/Burns School of Real Estate & Construction Management 303-871-4741 / 303-898-6546 (Mobile) [email protected]

Simon Thompson Director, Commercial Solutions ESRI 909-793-2853 / 909-653-5376 (Mobile) [email protected] Michael F. Amundson, MAI, CCIM, FRICS Managing Director Integra Realty Resources-Minneapolis/St. Paul 952-905-2401 / 612-741-6044 (Mobile) [email protected] George Ward, MAI, MRICS Integra Realty Resources, Inc. 212-255-7858 / [email protected]

mailto:[email protected]





Integra Realty Presentation 10/2/2012

Market Analysis for Retail Properties

9AM – 12:30PM 1:30PM – 5PM

@ Palms Ballroom 1

Gary Ralston

net-leased real estate. During that time he guided the company's growth from less than $15 million in real estate assets to over $1.5 billion.

Gary holds the Certified Commercial Investment Member (CCIM), Society of Industrial and Office Realtors (SIOR), Specialist in Real Estate Securities (SRS), Certified Property Manager (CPM), Counselor of Real Estate (CRE) and Senior Certified Leasing Specialist (SCLS) designations and is also a Florida licensed real estate broker and certified building contractor.

Gary is a senior instructor for the CCIM Institute and a member of the board of directors of the CCIM Institute and CCIM Technologies, Inc. He is a Past President of the Florida CCIM Chapter. Gary is a full member of the Urban Land Institute (ULI) and a former Vice Chairman of the Small Scale Development Council. He is a member of the International Council of Shopping Centers (ICSC) and an instructor for the ICSC University of Shopping Centers at Wharton, the ICSC Executive Learning series and RECon Academy.

Gary holds a Masters in Real Estate and Construction Management from the University of Denver and serves on the Burns Counselor Board of the Franklin L. Burns School of Real Estate and Construction Management at the University of Denver. In 2007 was named an adjunct faculty member at the University of Denver and in 2011 he was named an adjunct faculty member at Florida Southern College.

Gary is a past member of the Executive Advisory Board of the Center for Retailing Education and Research at the University of Florida. He was inducted as a Hoyt Fellow (www.hoyt.org) in 2001. In 2011 Gary was appointed to the Board of Directors of the Central Florida Development Council (www.cfdc.org). Gary is a member of the Regional Economic Information Network of the Jacksonville Branch of the Federal Reserve Bank of Atlanta.

Gary M. Ralston, CCIM, SIOR, SRS, CPM, CRE, SCLS, is a managing partner of Coldwell Banker

Commercial Saunders Ralston Dantzler Realty, LLC – the premier commercial services provider in Central Florida (Polk County). He is a recognized subject matter expert on retail and commercial properties. His consulting assignments include handling Florida REO properties for one of the nation’s largest special servicers of small commercial loans. He also serves as a

principal of a retail build-to-suit development and investment company.

From the early 1990s to 2004 Gary was the president and a member of the board of directors of Commercial Net Lease Realty, Inc. (NYSE:NNN) the industry leader in single-tenant corporate

http://www.hoyt.org/

http://www.cfdc.org/

Integra Training Session Outline

• Retail business overview

• Retail geographies

• Retail gap analysis

• Retail real estate definitions

• Tenant’s financially feasible rent

• Case study – “user in search of site”

• Other Web resources

CCIM Real Estate Feasibility Model

Financial Analysis

Market (Demand/Supply)

Analysis

Location, Site &

Building Analysis

Political & Legal

Analysis

Strategic Analysis

•Goals and Objectives

•Alternatives

•Decision Criteria

•“Go/No Go” Decision Points

• Real estate is space for people.

• Space for people to:

– live in

– work in

– shop in, and

– store things in.

• The demand for retail real estate is a

combination of people and money.

Retail “Interesting Facts”

• WMT is almost 10% of US non-automotive

retail sales (44, 45, less 4411)

• Top 100 retailers

– 259,400 stores – Less than 15% of total number of stores

– Almost 50% of total US non-automotive

retail sales

2011 Top 100 US Retailers www.stores.org

Rank Company Headquarters Sales # Stores 2011 Sales/Stores

1 Wal-Mart Bentonville, Ark. 316,083,000,000 4,423 71,463,486

WMT (less Sam's) 264,186,000,000 3,868 68,300,414

2 Kroger Cincinnati 85,491,000,000 3,574 23,920,257

3 Target Minneapolis 68,466,000,000 1,763 38,834,940

4 Walgreen Deerfield, Ill. 66,330,000,000 7,651 8,669,455

5 Costco Issaquah, Wash. 69,400,000,000 433 160,277,136

6 The Home Depot Atlanta 62,075,000,000 1,963 31,622,517

7 CVS Caremark Woonsocket, R.I. 59,688,000,000 7,345 8,126,344

Sam's Club (WMT) 53,795,000,000 611 88,044,190

8 Lowe's Mooresville, N.C. 49,282,000,000 1,712 28,786,215

9 Best Buy Richfield, Minn. 37,551,000,000 1,443 26,022,869

10 Safeway Pleasanton, Calif. 36,923,000,000 1,453 25,411,562

11 McDonald's Oak Brook, Ill. 34,172,000,000 14,087 2,425,783

12 Sears Holdings Hoffman Estates, Ill. 33,837,000,000 3,489 9,698,194

13 SUPERVALU Eden Prairie, Minn. 29,297,000,000 2,466 11,880,373

14 Publix Lakeland, Fla. 26,967,000,000 1,198 22,510,017

15 Amazon.com Seattle 26,397,000,000

16 Macy's Cincinnati 26,344,000,000 840 31,361,905

17 Rite Aid Camp Hill, Pa. 25,256,000,000 4,664 5,415,094

18 Ahold USA / Royal Ahold Washington, D.C. 25,074,000,000 756 33,166,667

19 Delhaize America Salisbury, N.C. 19,230,000,000 1,650 11,654,545

20 Kohl's Menomonee Falls, Wis. 18,804,000,000 1,127 16,685,004

21 Apple Stores / iTunes Cupertino, Calif. 17,825,000,000

Apple Stores 10,608,500,000 245 43,300,000

22 TJX Framingham, Mass. 17,386,000,000 2,212 7,859,855

23 J.C. Penney Plano, Texas 17,146,000,000 1,105 15,516,742

http://www.stores.org/2010/Top-100-Retailers?order=field_rank_value&sort=desc

http://www.stores.org/2010/Top-100-Retailers?order=field_rank_value&sort=desc


24 True Value Chicago 17,135,000,000 4,650 3,684,946

25 YUM! Brands Louisville, Ky. 17,100,000,000 18,050 947,368

26 H-E-B San Antonio 16,820,000,000 308 54,610,390

27 Meijer Grand Rapids, Mich. 16,603,000,000 197 84,279,188

28 Dollar General Goodlettsville, Tenn. 14,807,000,000 9,937 1,490,088

29 Wakefern / ShopRite Keasbey, N.J. 12,838,000,000 291 44,116,838

30 BJ's Wholesale Club Westborough, Mass. 11,797,000,000 196 60,188,776

31 Gap San Francisco, Calif. 11,443,000,000 2,436 4,697,455

32 Subway Milford, Conn. 11,206,000,000 25,014 447,989

33 Verizon Wireless Basking Ridge, N.J. 10,997,000,000 2,330 4,719,742

34 Nordstrom Seattle 10,497,000,000 225 46,653,333

35 7-Eleven Dallas 10,361,000,000 7,779 1,331,919

36 Staples Framingham, Mass. 10,337,000,000 1,583 6,530,006

37 Whole Foods Market Austin, Texas 9,794,000,000 311 31,491,961

38 Ace Hardware Oak Brook, Ill. 9,491,000,000 4,072 2,330,796

39 Bed Bath & Beyond Union, N.J. 9,402,000,000 1,143 8,225,722

40 Aldi Batavia, Ill. 9,218,000,000 1,195 7,713,808

41 Wendy's Dublin, Ohio 8,931,000,000 5,876 1,519,912

42 Ross Stores Pleasanton, Calif. 8,605,000,000 1,124 7,655,694

43 Limited Brands Columbus, Ohio 8,590,000,000 2,623 3,274,876

44 Family Dollar Matthews, N.C. 8,548,000,000 7,023 1,217,144

45 Burger King Holdings Miami 8,446,000,000 7,218 1,170,130

46 Toys "R" Us Wayne, N.J. 8,281,000,000 871 9,507,463

47 Army Air Force Exchange Dallas 8,228,000,000 181 45,458,564

48 Menard Eau Claire, Wis. 8,067,000,000 262 30,790,076

49 Starbucks Seattle 10,639,900,000 10,787 986,363


50 Darden Restaurants Orlando 7,905,000,000 1,936 4,083,161

51 Trader Joe's Monrovia, Calif. 7,307,000,000 376 19,433,511

52 Office Depot Boca Raton, Fla. 7,297,000,000 1,125 6,486,222

53 Barnes & Noble New York 7,157,000,000 1,330 5,381,203

54 Hy-Vee W. Des Moines, Iowa 7,092,000,000 261 27,172,414

55 Winn-Dixie Stores Jacksonville, Fla. 6,986,000,000 484 14,433,884

56 Health Mart Systems Omaha, Neb. 6,943,000,000 2,850 2,436,140

57 A&P Montvale, N.J. 6,791,000,000 310 21,906,452

58 Giant Eagle O'Hara Township, Pa. 6,681,000,000 406 16,455,665

59 GameStop Grapevine, Texas 6,566,000,000 4,455 1,473,850

60 Dollar Tree Chesapeake, Va. 6,531,000,000 4,252 1,535,983

61 AutoZone Memphis 6,523,000,000 4,507 1,447,304

62 AT&T Wireless Dallas 6,486,000,000 2,300 2,820,000

63 Dunkin' Brands Canton, Mass. 6,428,000,000 9,472 678,632

64 DineEquity Glendale, Calif. 6,322,000,000 3,385 1,867,651

65 Wegman's Food Markets Rochester, N.Y. 6,199,000,000 78 79,474,359

66 Dillard's Little Rock, Ark. 6,194,000,000 304 20,375,000

67 Advance Auto Parts Roanoke, Va. 6,119,000,000 3,636 1,682,893

68 O'Reilly Automotive Springfield, Mo. 5,789,000,000 3,740 1,547,861

69 OfficeMax Naperville, Ill. 5,529,000,000 881 6,275,823

70 QVC West Chester, Pa. 5,412,000,000

71 Dick's Sporting Goods Coraopolis, Pa. 5,212,000,000 561 9,290,553

72 PetSmart Phoenix, Ariz. 5,186,000,000 1,159 4,474,547

73 Big Lots Columbus, Ohio 5,093,000,000 1,451 3,509,993

74 Defense Commissary Agcy. Fort Lee, Va. 5,067,000,000 180 28,150,000

75 Save Mart Modesto, Calif. 5,036,000,000 238 21,159,664


76 Alimentation Couche-Tard Tempe, Ariz. 4,867,000,000 4,050 1,201,728

77 Dell Round Rock, Texas 4,748,000,000

78 WinCo Foods Boise, Idaho 4,563,000,000 80 57,037,500

79 Sherwin-Williams Cleveland 4,529,000,000 3,326 1,361,696

80 Harris Teeter Supermkts. Charlotte, N.C. 4,286,000,000 204 21,009,804

81 Tractor Supply Co. Brentwood, Tenn. 4,233,000,000 1,085 3,901,382

82 Albertsons Boise, Idaho 4,100,000,000 211 19,431,280

83 Chick-fil-A Atlanta 4,051,000,000 1,615 2,508,359

84 Brinker International Dallas 4,038,000,000 1,335 3,024,719

85 Neiman Marcus Dallas 4,035,000,000 77 52,402,597

86 Foot Locker New York 3,959,000,000 2,476 1,598,950

87 RadioShack Fort Worth, Texas 3,959,000,000 5,480 722,445

88 Burlington Coat Factory Burlington, N.J. 3,837,000,000 477 8,044,025

89 Roundy's Supermarkets Milwaukee, Wis. 3,827,000,000 158 24,221,519

90 Michaels Stores Irving, Texas 3,825,000,000 1,109 3,449,053

91 Belk Charlotte, N.C. 3,700,000,000 303 12,211,221

92 Stater Bros. Holdings San Bernardino, Calif. 3,693,000,000 167 22,113,772

93 Sonic Oklahoma City, Okla. 3,693,000,000 3,561 1,037,068

94 Williams-Sonoma San Francisco 3,682,000,000 561 6,563,280

95 IKEA North America Conshohocken, Pa. 3,632,000,000 38 95,578,947

96 Price Chopper Supermkts. Rotterdam, N.Y. 3,556,000,000 129 27,565,891

97 The Sports Authority Englewood, Colo. 3,471,000,000 460 7,545,652

98 OSI Restaurant Partners Tampa, Fla. 3,461,000,000 1248 2,773,237

99 Ingles Markets Asheville, N.C. 3,429,000,000 203 16,891,626

100 Raley's W. Sacramento, Calif. 3,335,000,000 142 23,485,915

http://www.stores.org/2012/Top-100-Retailers






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Retail Business Life Cycle

• Real estate is space for people.

• Space for people to:

– live in

– work in

– shop in, and

– store things in.

• The demand for retail real estate is a

combination of people and money.

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2007 363,340 364,458 367,902 366,466 371,045 367,773 369,539 371,085 374,620 374,485 378,939 376,660

2008 376,031 372,110 372,846 374,810 376,189 377,289 375,214 373,741 366,877 353,187 342,298 333,348

2009 338,246 337,081 331,380 332,258 335,557 339,659 340,600 348,621 339,523 342,223 346,812 348,184

2010 348,585 348,794 355,695 358,023 355,693 354,404 355,436 358,715 361,756 366,507 370,165 372,587

2011 375,739 378,934 382,115 383,810 383,733 387,045 388,064 388,595 392,354 395,995 397,868 398,012

2012 400,550 404,692 406,200 404,112 403,641 400,635 403,176 NA NA NA NA NA

Source: Monthly Retail Trade and Food Services

44X72: Retail Trade and Food Services: U.S. Total

Seasonally Adjusted Sales - Monthly [Millions of Dollars]

Period: 2007 to 2012

Definition: NAICS 44-45, Retail Trade

The Retail Trade sector comprises establishments engaged in retailing merchandise, generally without transformation, and rendering services incidental to the sale of merchandise. The retailing process is the final step in the distribution of merchandise; retailers are, therefore, organized to sell merchandise in small quantities to the general public.

NAICS & Retail Sales

• Industry Statistics Sampler

– http://www.census.gov/econ/industry/

– Drill down on retail 44-45

– Advance Monthly Sales for Retail and Food Services

• Explain food services NAICS 72

• 2012 NAICS – http://www.census.gov/retail/index.html

• Time Series (Adjusted Sales Data/Seasonal Factors—1992 to present – Example with ex-auto --- discuss difference

http://www.census.gov/econ/industry/



http://www.census.gov/retail/index.html

http://www.census.gov/retail/marts/www/timeseries.html





Types of Retailers

• Defined by NAICS / often called retail line of trade

• http://www.census.gov/cgi-bin/sssd/naics/naicsrch?chart_code=44&search=2012 NAICS Search

• Focus on Retail 44-45

• Also 722 Food services and drinking places


Go to web page and illustrate http://www.census.gov/cgi-bin/sssd/naics/naicsrch?chart=2012

http://www.census.gov/econ/census02/data/us/US000.HTM

http://www.census.gov/cgi-bin/sssd/naics/naicsrch?chart=2012




http://www.census.gov/econ/census02/data/us/US000_44.HTM

2007 Economic Census

44-45 & 722 Retail and food services sales, total 4,647,648

Retail sales and food services excl motor vehicle and parts 3,821,349

Retail sales, total 4,154,147

Retail sales, total (excl. motor vehicle and parts dealers) 3,327,848

441 Motor vehicle and parts dealers 826,299

442 Furniture and home furnishings stores 88,821

443 Electronics and appliance stores 99,996

444 Building mat. and garden equip. and supplies dealers 278,902

445 Food and beverage stores 613,908

446 Health and personal care stores 272,286

447 Gasoline stations 526,196

448 Clothing and clothing access. stores 226,748

451 Sporting goods, hobby, book, and music stores 84,671

452 General merchandise stores 629,123

453 Miscellaneous store retailers 113,452

454 Nonstore retailers 393,745

722 Food services and drinking places 493,501

Total Retail Sales 2011

http://www.census.gov/retail/index.html

• Consumer is “trading down” / recession retail • Wal-Mart

• Dollar stores

• Warehouse clubs

Retail Business Trends

• Consumer is “trading down” / recession retail • Wal-Mart

• Dollar stores

• Warehouse clubs

• Convenience & Value

• Efficiency

– Who took Circuit City’s business?

• The internet??

Retail Business Trends

NAICS code

2009

Value of sales (million dollars) E-commerce as %

of total sales Total E-commerce

Retail trade, total 44-45 3,638,471 145,214 4.0

Motor vehicle and parts dealers 441 676,801 17,201 2.5

Furniture and home furnishings stores 442 86,657

Electronics and appliance stores 443 98,384 1,140 1.2

Building material/garden equipment/supplies stores 444 268,206 477 0.2

Food and beverage stores 445 570,581 883 0.2

Health and personal care stores 446 253,243 177 0.1

Gasoline station 447 388,515

Clothing and clothing accessories stores 448 204,866 2,965 1.4

Sporting goods, hobby, book, and music stores 451 81,373 1,865 2.3

General merchandise stores 452 592,009 220

Miscellaneous store retailers 453 105,366 2,360 2.2

Nonstore retailers 454 312,470 116,543 37.3

..Electronic shopping and mail-order houses 45411 234,667 112,791 48.1

Source: U.S. Census Bureau, "E-Stats, 2009 E-commerce Multi-sector Report," May 2011.

Retail Trade Sales--Total and E-Commerce

http://www.dollargeneral.com/OurStores/Pages/StoreLocator.aspx



Estimated Quarterly U.S. Retail Sales (Adjusted1): Total and E-commerce2

(Estimates are based on data from the Monthly Retail Trader Survey and administrative records.)

Retail Sales E-commerce Percent Change Percent Change

(millions of dollars) as a Percent From Prior Quarter From Same Quarter

Quarter

of A Year Ago

Total E-commerce Total Total E-commerce Total E-commerce

2nd quarter 2012(p) 1,076,934 54,842 5.1 -0.4 3.3 4.3 15.3

1st quarter 2012(r) 1,081,347 53,091 4.9 1.5 2.9 6.4 15.3

4th quarter 2011 1,065,030 51,575 4.8 2.0 6.2 7.5 15.1

3rd quarter 2011 1,044,075 48,564 4.7 1.1 2.1 8.9 12.8

2nd quarter 2011(r) 1,032,271 47,575 4.6 1.5 3.3 8.4 15.7

1st quarter 2011 1,016,544 46,065 4.5 2.6 2.8 8.3 17.2

4th quarter 2010 990,726 44,819 4.5 3.3 4.1 7.2 17.4

3rd quarter 2010 958,694 43,043 4.5 0.7 4.7 4.6 16.1

2nd quarter 2010 952,070 41,112 4.3 1.4 4.6 6.4 16.9

1st quarter 2010 938,772 39,295 4.2 1.6 3.0 5.1 14.9


Estimated Quarterly U.S. Retail Sales (Adjusted1): Total and E-commerce2

(Estimates are based on data from the Monthly Retail Trader Survey and administrative records.)

Retail Sales E-commerce Percent Change Percent Change

(millions of dollars) as a Percent From Prior Quarter From Same Quarter

Quarter

of A Year Ago

Total E-commerce Total Total E-commerce Total E-commerce

2nd quarter 2012(p) 1,076,934 54,842 5.1 -0.4 3.3 4.3 15.3

1st quarter 2012(r) 1,081,347 53,091 4.9 1.5 2.9 6.4 15.3

4th quarter 2011 1,065,030 51,575 4.8 2.0 6.2 7.5 15.1

3rd quarter 2011 1,044,075 48,564 4.7 1.1 2.1 8.9 12.8

2nd quarter 2011(r) 1,032,271 47,575 4.6 1.5 3.3 8.4 15.7

1st quarter 2011 1,016,544 46,065 4.5 2.6 2.8 8.3 17.2

4th quarter 2010 990,726 44,819 4.5 3.3 4.1 7.2 17.4

3rd quarter 2010 958,694 43,043 4.5 0.7 4.7 4.6 16.1

2nd quarter 2010 952,070 41,112 4.3 1.4 4.6 6.4 16.9

1st quarter 2010 938,772 39,295 4.2 1.6 3.0 5.1 14.9

Amazon.com

Amazon 2011 10K

Amazon.com

Amazon 2011 10K

• Internet means an informed consumer – Retail margins are under pressure

– = lower rent

• Technology creates more efficient use of inventory & space – = more sales in less space

– = smaller stores

• Large spaces are hard to re-tenant

• Tenant reps - help tenants upgrade location quality

• Exclusive use provisions will impact 2nd generation space

• “Start ups” companies retail, service, etc. will be new “mom & pops”

Retail Real Estate Trends

• Internet means an informed consumer – Retail margins are under pressure – equals lower rent

• Technology creates more efficient use of inventory & space – equals more sales in less space – equals smaller stores

• Supermarket business is increasingly focused on dominant players and larger stores

• Retail industry is increasing dominated by stronger, national anchors over their smaller regional/local peers

• This is not necessarily the case with in-line space • Large spaces are hard to re-tenant


• Exclusive use provisions will impact 2nd generation space

• Landlords are making greater use of service tenants to maintain occupancy

• One study – service was less than 15% ten years ago vs. 24% today

• “Start ups” companies retail, service, etc. will be new “mom & pops”


Why More Open Stores

• Economies of Scale

– One promotional cost for all stores

– Share distribution center

– Leverage management and central operations

• Cannibalization

– Open stores as long as profits increase

– Cannibalization diminishes returns from

locating too many stores in an area

Factors Affecting Store Location

• Strategic fit with target market

– (customers = demand)

• Competition (supply)

• Cost of operating store

– (financial feasibility for retailer)

• Economic conditions

– Retailers expand when they are gaining market

share and generating free cash flow

– General demographic trends

• Growing population and income = more retail sales

How Do Retailers Evaluate Sites

• Estimates potential sales at location

– Minimum population or # of households

– Income and lifestyle characteristics

• Site characteristics

– Specifics which many increase or decrease

potential sales estimate

– Parking

– Visibility

– Adjacent tenants

Adjacent Tenants

• Exclusive use restrictions

– Creates artificial demand

• Complimentary (traffic generators)

• Principle of Cumulative Attractiveness

• Co-Tenancy

Retailers Financial Feasibility

• Occupancy cost is a percentage of sales

• Occupancy costs includes

– Base rent

– CAM

– Taxes, insurance, etc.

• Different retail lines of trade have different

gross operating margins and thus rent as

a percent of sales can vary

– Dollar store vs auto parts vs jewelry store

Retail Gross Margin

Cost Kroger AMZN WMT Sears

Sales 87,048,000,000 90,374,000,000 48,077,000,000 418,952,000,000 41,567,000,000

COGS 77,739,000,000 71,494,000,000 37,288,000,000 315,287,000,000 30,836,000,000

Gross Margin 9,309,000,000 18,880,000,000 10,789,000,000 103,665,000,000 10,731,000,000

Gross Margin % 10.7% 20.9% 22.4% 24.7% 25.8%

Publix WAG TGT DG HD

Sales 26,967,389,000 72,184,000,000 65,786,000,000 14,807,188,000 67,997,000,000

COGS 19,520,370,000 51,692,000,000 45,725,000,000 10,109,278,000 44,693,000,000

Gross Margin 7,447,019,000 20,492,000,000 20,061,000,000 4,697,910,000 23,304,000,000

Gross Margin % 27.6% 28.4% 30.5% 31.7% 34.3%

Advance Auto Parts Example

• Search Advance Auto Parts

• Investor Relations

• Annual Report / 10K

• Look for income statement

Sears Holding Corporation

Starbucks (NASDAQ:SBUX) %

FY ending 12/2/2011

Net Sales 9,632,400,000

Cost of sales including occupancy costs 4,949,300,000 51.4%

Gross Margin 4,683,100,000 48.6%

Coffee can pay a lot of rent!

Purchasing Power

• Estimating demand

– People / households

– Income / disposable income

– Lifestyle / tapestry – http://www.esri.com/library/brochures/pdfs/tapestry-segmentation.pdf

• STDB Retail MarketPlace Profile report – http://www.esri.com/library/whitepapers/pdfs/esri-data-retail-marketplace.pdf

http://www.esri.com/library/brochures/pdfs/tapestry-segmentation.pdf



http://www.esri.com/library/whitepapers/pdfs/esri-data-retail-marketplace.pdf







Summary Demographics

2009 Population 309,731,508

2009

Households 116,523,156

2009 Median Disposable Income $43,361

2009 Per Capita Income $27,277

Industry Summary Demand Supply Retail Gap Surplus / Leakage Number of

(Retail Potential) (Retail Sales) (Demand - Supply) Factor Businesses

Total Retail Trade and Food & Drink (NAICS 44-45, 722) $3,159,959,994,136 $3,204,182,167,862 -$44,222,173,726 -0.7 2,549,724

Total Retail Trade (NAICS 44-45) $2,696,791,458,246 $2,748,067,968,046 -$51,276,509,800 -0.9 1,864,278

Total Food & Drink (NAICS 722) $463,168,535,890 $456,114,199,816 $7,054,336,074 0.8 685,446

Demand Supply Surplus / Leakage Number of

Industry Group (Retail Potential) (Retail Sales) Retail Gap Factor Businesses

Motor Vehicle & Parts Dealers (NAICS 441) $670,514,909,767 $687,977,716,392 -$17,462,806,625 -1.3 235,175

Automobile Dealers (NAICS 4411) $578,877,558,045 $593,335,669,404 -$14,458,111,359 -1.2 111,692

Other Motor Vehicle Dealers (NAICS 4412) $50,330,131,040 $52,094,544,181 -$1,764,413,141 -1.7 42,451

Auto Parts, Accessories, and Tire Stores (NAICS 4413) $41,307,220,682 $42,547,502,807 -$1,240,282,125 -1.5 81,032

Furniture & Home Furnishings Stores (NAICS 442) $98,919,930,686 $91,847,106,437 $7,072,824,249 3.7 110,176

Furniture Stores (NAICS 4421) $62,542,941,027 $54,742,430,323 $7,800,510,704 6.7 47,868

Home Furnishings Stores (NAICS 4422) $36,376,989,659 $37,104,676,114 -$727,686,455 -1.0 62,308

Electronics & Appliance Stores (NAICS 443/NAICS 4431) $82,417,769,734 $84,493,504,711 -$2,075,734,977 -1.2 123,325

Bldg Materials, Garden Equip. & Supply Stores (NAICS 444) $116,439,012,859 $116,952,731,058 -$513,718,199 -0.2 166,028

Building Material and Supplies Dealers (NAICS 4441) $106,549,571,943 $106,658,508,886 -$108,936,943 -0.1 129,317

Lawn and Garden Equipment and Supplies Stores (NAICS

4442) $9,889,440,916 $10,294,222,172 -$404,781,256 -2.0 36,711

Food & Beverage Stores (NAICS 445) $512,484,559,459 $518,878,839,136 -$6,394,279,677 -0.6 218,892

Grocery Stores (NAICS 4451) $469,368,667,754 $476,447,171,320 -$7,078,503,566 -0.7 129,623

Specialty Food Stores (NAICS 4452) $18,839,987,869 $16,811,716,877 $2,028,270,992 5.7 51,200

Beer, Wine, and Liquor Stores (NAICS 4453) $24,275,903,836 $25,619,950,939 -$1,344,047,103 -2.7 38,069



Health & Personal Care Stores (NAICS 446/NAICS 4461) $104,417,752,601 $113,430,264,401 -$9,012,511,800 -4.1 129,338

Gasoline Stations (NAICS 447/NAICS 4471) $432,703,600,864 $424,337,402,649 $8,366,198,215 1.0 105,225

Clothing and Clothing Accessories Stores (NAICS 448) $120,364,069,285 $128,104,648,006 -$7,740,578,721 -3.1 236,065

Clothing Stores (NAICS 4481) $93,448,677,340 $99,070,632,972 -$5,621,955,632 -2.9 156,523

Shoe Stores (NAICS 4482) $11,788,977,284 $12,755,794,092 -$966,816,808 -3.9 30,754

Jewelry, Luggage, and Leather Goods Stores (NAICS 4483) $15,126,414,661 $16,278,220,942 -$1,151,806,281 -3.7 48,788

Sporting Goods, Hobby, Book, and Music Stores (NAICS 451) $38,531,396,409 $42,190,971,217 -$3,659,574,808 -4.5 131,312

Sporting Goods/Hobby/Musical Instrument Stores (NAICS

4511) $20,217,691,471 $22,438,790,537 -$2,221,099,066 -5.2 102,310

Book, Periodical, and Music Stores (NAICS 4512) $18,313,704,938 $19,752,180,680 -$1,438,475,742 -3.8 29,002

General Merchandise Stores (NAICS 452) $370,767,412,695 $385,040,000,063 -$14,272,587,368 -1.9 76,412

Department Stores Excluding Leased Depts. (NAICS 4521) $180,743,211,742 $182,664,226,029 -$1,921,014,287 -0.5 30,293

Other General Merchandise Stores (NAICS 4529) $190,024,200,953 $202,375,774,034 -$12,351,573,081 -3.1 46,119

Miscellaneous Store Retailers (NAICS 453) $55,167,277,457 $57,875,769,094 -$2,708,491,637 -2.4 303,678

Florists (NAICS 4531) $6,289,266,686 $5,478,872,712 $810,393,974 6.9 41,534

Office Supplies, Stationery, and Gift Stores (NAICS 4532) $18,313,701,964 $19,267,443,167 -$953,741,203 -2.5 83,592

Used Merchandise Stores (NAICS 4533) $4,331,171,072 $4,863,757,757 -$532,586,685 -5.8 59,822

Other Miscellaneous Store Retailers (NAICS 4539) $26,233,137,735 $28,265,695,458 -$2,032,557,723 -3.7 118,730

Nonstore Retailers (NAICS 454) $94,063,766,430 $96,939,014,882 -$2,875,248,452 -1.5 28,652

Electronic Shopping and Mail-Order Houses (NAICS 4541) $49,213,479,731 $54,134,827,567 -$4,921,347,836 -4.8 5,329

Vending Machine Operators (NAICS 4542) $14,368,545,500 $10,946,777,588 $3,421,767,912 13.5 8,277

Direct Selling Establishments (NAICS 4543) $30,481,741,199 $31,857,409,727 -$1,375,668,528 -2.2 15,046

Food Services & Drinking Places (NAICS 722) $463,168,535,890 $456,114,199,816 $7,054,336,074 0.8 685,446

Full-Service Restaurants (NAICS 7221) $196,120,539,286 $200,757,467,451 -$4,636,928,165 -1.2 384,498

Limited-Service Eating Places (NAICS 7222) $203,344,507,091 $191,605,481,221 $11,739,025,870 3.0 210,456

Special Food Services (NAICS 7223) $38,017,365,935 $38,012,352,773 $5,013,162 0.0 34,658

Drinking Places - Alcoholic Beverages (NAICS 7224) $25,686,123,578 $25,738,898,371 -$52,774,793 -0.1 55,834

Retail Geographies

• Region – Typically formal geographies such as MSA or

combination of Counties

• Market – Typically formal geographies such as Counties or

divisions of Counties

• Submarket – Group of buildings competitive with each other and

distinct boundaries, often zip codes

• Trade Area (Retail Trade Area) – will discuss and demonstrate in Case Study

Trade Area

• A Retail trade area is the geographic area

from which the steady, sustaining

patronage for a shopping center is

obtained.

• Trade area delineation

Rules for defining a Retail Trade Area

• Trade Area defined using Theissen Polygon – ½ distance to next occurrence of competing

supply • Cannibalization

• Consistent with Reilly’s Law of Gravitational Analysis for retail properties

• Map competing supply and/or next closest store of same chain (cannibalization)

• Establish preliminary boundary of trade area based on ½ distance to competing supply in each direction

• Adjust to account for road systems

Ralston’s Rules for retail trade areas

1) Radius – ½ distance to next competing

point of supply

2) Drive-time (3, 5 & 10 min)

3) Custom polygon based on physical

boundaries and road network

Subject & DG -> 3 mile radius trade area

Trade Area -> 3 mile radius, plus 3, 5 10 min drive time

Trade Area -> 3 mile radius trade area, plus 3, 5 10 min drive time & custom polygon

Retail (Sales) Gap Model

• Retail Sales Gap Model Disaggregated by Line-of-Trade

– Delineate “Trade Area”

– ESRI Retail Sales Demand estimates using modified Retail MarketPlace Profile report

– ESRI or CoStar estimate of Supply – report modified to address NAICS retail line-of-trade

– Gap (Leakage) calculation

• Tenants within Lines of Trade with “positive Gap”

Gap Analysis – Benchmark Geography

• Model for demand parameter:

Total retail SF in “benchmark geography”

Divided by:

Population or households in benchmark geography

= Retail SF per capita or per household in benchmark geography

1. Select Benchmark Geography

a. Typically MSA or County

2. Calculate Demand parameter

=

÷

Retail square feet per capita or per household in benchmark

geography

Total population or number of households in benchmark geography

Total retail square feet in benchmark geography

Model for Demand Parameter

Gap Analysis

3. Estimate the demand for aggregate

retail space in the market area

If vacancy in the benchmark geography or the

Market area is other than “normalized” i.e., long

term stabilized occupancy, then adjust to account

for normalized vacancy.

=

× Market area population or number of households

Demand parameter

Square feet of demand

Model for Demand

Gap Analysis

=

- Supply

Demand including

Gap including adjustment for acceptable vacancy

Model for Gap

4. Calculate the gap including an acceptable vacancy for aggregate retail space in the market area

Gap Analysis

Gap using Benchmark Geography

• Lake County, FL – Population 305,150 – Households 126,929 – Retail SF 6,046,685

• Trade Area

– Households 11,800 – Retail SF 410,000

• What is the Gap?

Retail SF in Lake 6,046,685

HH in Lake 126,929

SF/HH

47.64

Demand Parameter

47.64

# of HH in Trade Area 11,800

Demand

562,132

Demand

562,132

Supply in Trade Area

410,000

Gap

152,132

Benchmark Geography Example

Some say we have too much space

43.0

44.0

45.0

46.0

47.0

48.0

49.0

50.0

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

US Retail Space Per Capita has increased but so have sales until 2007

• Retail Activity can occur as either a free standing establishment or as part of a shopping center

• Two principal sources of information are ICSC and ULI

• Dollars and Cents of Shopping Centers

10/2/2012

61

Retail Activity

Retail Space Definitions (ICSC / ULI)

• Freestanding Costar -> General • Shopping Centers

– Open Air Costar -> Shopping Center

• Convenience Strip Centers • Neighborhood Neighborhood • Community Community • Power Center (a/k/a Super Community)

• Other Costar -> Specialty – Lifestyle Theme / Festival – Theme / Festival Outlet

– Enclosed

• Regional / Superregional Costar -> Mall • Outlet

• Mixed use

2008 2009 2010 2011

Number of Shopping Centers1 106,617 107,514 107,773 107,823

Minimum Size Shopping Center Included No Minimum Size No Minimum Size No Minimum Size No Minimum Size

Shopping Centers by Type (Number of Centers):1

Super-Regional (800,000+ sq ft) 639 644 646 646

Regional (400,000 - 800,000 sq ft) 779 791 791 791

Community (100,000 - 350,000 sq ft) 9,211 9,293 9,317 9,324

Neighborhood (30,000 - 150,000 sq ft) 31,582 31,804 31,875 31,887

Power Center (250,000 - 600,000 sq ft) 2,027 2,070 2,079 2,083

Lifestyle (150,000 - 500,000 sq ft) 391 412 417 418

Theme/Festival (80,000 - 250,000 sq ft) 247 250 250 250

Outlet (50,000 - 400,000 sq ft) 319 323 325 325

Strip/Convenience (< 30,000 sq ft) 61,355 61,859 62,004 62,030

Airport Retail (75,000 - 250,000 sq ft) 67 68 69 69

Shopping Center GLA1 7,234,299,203 sq ft 7,307,603,702 sq ft 7,325,729,312 sq ft 7,330,063,735 sq ft

Shopping Centers by Type (Share of GLA):1

Super-Regional (800,000+ sq ft) 10.7% 10.7% 10.7% 10.7%

Regional (400,000 - 800,000 sq ft) 6.2% 6.2% 6.2% 6.2%

Community (100,000 - 350,000 sq ft) 24.9% 24.8% 24.8% 24.8%

Neighborhood (30,000 - 150,000 sq ft) 31.8% 31.7% 31.7% 31.7%

Power Center (250,000 - 600,000 sq ft) 11.3% 11.4% 11.4% 11.5%

Lifestyle (150,000 - 500,000 sq ft) 1.8% 1.8% 1.8% 1.8%

Theme/Festival (80,000 - 250,000 sq ft) 0.5% 0.5% 0.5% 0.5%

Outlet (50,000 - 400,000 sq ft) 1.0% 1.0% 1.0% 1.0%

Strip/Convenience (< 30,000 sq ft) 11.6% 11.6% 11.6% 11.6%

Airport Retail (75,000 - 250,000 sq ft) 0.2% 0.2% 0.2% 0.2%

Shopping Center GLA as % of Total Retail Space 45.9% 46.0% 45.9% 45.9%

Total Shopping Center GLA per 100 Inhabitants 2,376 sq ft 2,380 sq ft 2,372 sq ft N/A

Number of Retail Establishments2 N/A N/A N/A N/A

Source: www.costar.com

Sales 2008 2009 2010 2011

Total Retail Sales (in USD)2 US$4.41 tril. US$4.09 tril. US$4.36 tril. N/A

Year-on-Year % Change in Retail Sales -0.9% -7.2% 6.4% N/A

Total Retail Sales per Capita (in USD) US$14,626 US$14,363 US$13,253 N/A

Total Retail Sales % GDP2, 3 31.7% 30.7% 29.0% N/A

Shopping-Center Sales (in USD)2, 4, 5 US$2.27 tril. US$2.22 tril. US$2.29 tril. N/A

Year-on-Year % Change in Shopping-Center Sales 0.7% -2.6% 3.4% N/A

Shopping-Center Sales per Capita (in USD) US$7,423 US$7,408 US$7,176 N/A

Shopping-Center Sales % GDP 16.1% 15.8% 15.7% N/A

Market Cap Using Repeat Sales Price Estimate Methodology for 2009*

Property Type Square Footage Price/SF Market Cap

Office 12,058,379,264 $136 $1,639,939,579,842

Industrial 23,851,606,671 $45 $1,073,322,300,185

Flex 2,907,635,121 $91 $264,594,796,011

Retail 17,336,105,191 $172 $2,981,810,092,879

Health Care 2,634,773,693 $490 $1,291,039,109,668

Hospitality 2,556,726,260 $97 $894,854,191,000

Mixed-Use 107,651,632 $95 $10,226,905,040

Multi-Family 22,643,500,000 $62 $1,403,897,000,000 Specialty, Sports & Entertainment $ 1,953,008,671,667

Totals 84,096,377,832 $10,865,840,902,512

This approach uses an arithmetic value weighting for Office, Industrial, Retail and Multifamily

prices shaded here in green. This estimate is closer to the end of 2009. The other values

remain the same. See: “A Comprehensive Approach to Commercial Real Estate Prices”

by Ruijue Peng et al, ARES 2010

Retail Space Per Capita U.S. Avg = 56.4 sq ft per capita

Shopping Center Terms

• Types of space – In-line

– End cap

– Elbow

– Out-parcel

– Pad

• Measurement -> GLA

• Typical lease terms – 3 to 5 years for locals, 10 to 20 years for anchors

– NN, NNN

– CAM Charges

Retail Demand Segmentation

• Consumer income

• Population & household numbers

• Consumer expenditure percentages

Retail Demand Estimate

• Purchasing Power

– Per Capita Income

or

– Average Household Income

• Disposable purchasing power estimate

• Allocation of purchasing based on consumer expenditure patterns.

Summary Demographics

2009 Population 309,731,508

2009

Households 116,523,156

2009 Median Disposable Income $43,361

2009 Per Capita Income $27,277

Industry Summary Demand Supply Retail Gap Surplus / Leakage Number of

(Retail Potential) (Retail Sales) (Demand - Supply) Factor Businesses

Total Retail Trade and Food & Drink (NAICS 44-45, 722) $3,159,959,994,136 $3,204,182,167,862 -$44,222,173,726 -0.7 2,549,724

Total Retail Trade (NAICS 44-45) $2,696,791,458,246 $2,748,067,968,046 -$51,276,509,800 -0.9 1,864,278

Total Food & Drink (NAICS 722) $463,168,535,890 $456,114,199,816 $7,054,336,074 0.8 685,446



Motor Vehicle & Parts Dealers (NAICS 441) $670,514,909,767 $687,977,716,392 -$17,462,806,625 -1.3 235,175

Automobile Dealers (NAICS 4411) $578,877,558,045 $593,335,669,404 -$14,458,111,359 -1.2 111,692

Other Motor Vehicle Dealers (NAICS 4412) $50,330,131,040 $52,094,544,181 -$1,764,413,141 -1.7 42,451

Auto Parts, Accessories, and Tire Stores (NAICS 4413) $41,307,220,682 $42,547,502,807 -$1,240,282,125 -1.5 81,032

Furniture & Home Furnishings Stores (NAICS 442) $98,919,930,686 $91,847,106,437 $7,072,824,249 3.7 110,176

Furniture Stores (NAICS 4421) $62,542,941,027 $54,742,430,323 $7,800,510,704 6.7 47,868

Home Furnishings Stores (NAICS 4422) $36,376,989,659 $37,104,676,114 -$727,686,455 -1.0 62,308

Electronics & Appliance Stores (NAICS 443/NAICS 4431) $82,417,769,734 $84,493,504,711 -$2,075,734,977 -1.2 123,325

Bldg Materials, Garden Equip. & Supply Stores (NAICS 444) $116,439,012,859 $116,952,731,058 -$513,718,199 -0.2 166,028

Building Material and Supplies Dealers (NAICS 4441) $106,549,571,943 $106,658,508,886 -$108,936,943 -0.1 129,317

Lawn and Garden Equipment and Supplies Stores (NAICS

4442) $9,889,440,916 $10,294,222,172 -$404,781,256 -2.0 36,711

Food & Beverage Stores (NAICS 445) $512,484,559,459 $518,878,839,136 -$6,394,279,677 -0.6 218,892

Grocery Stores (NAICS 4451) $469,368,667,754 $476,447,171,320 -$7,078,503,566 -0.7 129,623

Specialty Food Stores (NAICS 4452) $18,839,987,869 $16,811,716,877 $2,028,270,992 5.7 51,200

Beer, Wine, and Liquor Stores (NAICS 4453) $24,275,903,836 $25,619,950,939 -$1,344,047,103 -2.7 38,069



Health & Personal Care Stores (NAICS 446/NAICS 4461) $104,417,752,601 $113,430,264,401 -$9,012,511,800 -4.1 129,338

Gasoline Stations (NAICS 447/NAICS 4471) $432,703,600,864 $424,337,402,649 $8,366,198,215 1.0 105,225

Clothing and Clothing Accessories Stores (NAICS 448) $120,364,069,285 $128,104,648,006 -$7,740,578,721 -3.1 236,065

Clothing Stores (NAICS 4481) $93,448,677,340 $99,070,632,972 -$5,621,955,632 -2.9 156,523

Shoe Stores (NAICS 4482) $11,788,977,284 $12,755,794,092 -$966,816,808 -3.9 30,754

Jewelry, Luggage, and Leather Goods Stores (NAICS 4483) $15,126,414,661 $16,278,220,942 -$1,151,806,281 -3.7 48,788

Sporting Goods, Hobby, Book, and Music Stores (NAICS 451) $38,531,396,409 $42,190,971,217 -$3,659,574,808 -4.5 131,312


4511) $20,217,691,471 $22,438,790,537 -$2,221,099,066 -5.2 102,310

Book, Periodical, and Music Stores (NAICS 4512) $18,313,704,938 $19,752,180,680 -$1,438,475,742 -3.8 29,002

General Merchandise Stores (NAICS 452) $370,767,412,695 $385,040,000,063 -$14,272,587,368 -1.9 76,412

Department Stores Excluding Leased Depts. (NAICS 4521) $180,743,211,742 $182,664,226,029 -$1,921,014,287 -0.5 30,293

Other General Merchandise Stores (NAICS 4529) $190,024,200,953 $202,375,774,034 -$12,351,573,081 -3.1 46,119

Miscellaneous Store Retailers (NAICS 453) $55,167,277,457 $57,875,769,094 -$2,708,491,637 -2.4 303,678

Florists (NAICS 4531) $6,289,266,686 $5,478,872,712 $810,393,974 6.9 41,534

Office Supplies, Stationery, and Gift Stores (NAICS 4532) $18,313,701,964 $19,267,443,167 -$953,741,203 -2.5 83,592

Used Merchandise Stores (NAICS 4533) $4,331,171,072 $4,863,757,757 -$532,586,685 -5.8 59,822

Other Miscellaneous Store Retailers (NAICS 4539) $26,233,137,735 $28,265,695,458 -$2,032,557,723 -3.7 118,730

Nonstore Retailers (NAICS 454) $94,063,766,430 $96,939,014,882 -$2,875,248,452 -1.5 28,652

Electronic Shopping and Mail-Order Houses (NAICS 4541) $49,213,479,731 $54,134,827,567 -$4,921,347,836 -4.8 5,329

Vending Machine Operators (NAICS 4542) $14,368,545,500 $10,946,777,588 $3,421,767,912 13.5 8,277

Direct Selling Establishments (NAICS 4543) $30,481,741,199 $31,857,409,727 -$1,375,668,528 -2.2 15,046

Food Services & Drinking Places (NAICS 722) $463,168,535,890 $456,114,199,816 $7,054,336,074 0.8 685,446

Full-Service Restaurants (NAICS 7221) $196,120,539,286 $200,757,467,451 -$4,636,928,165 -1.2 384,498

Limited-Service Eating Places (NAICS 7222) $203,344,507,091 $191,605,481,221 $11,739,025,870 3.0 210,456

Special Food Services (NAICS 7223) $38,017,365,935 $38,012,352,773 $5,013,162 0.0 34,658

Drinking Places - Alcoholic Beverages (NAICS 7224) $25,686,123,578 $25,738,898,371 -$52,774,793 -0.1 55,834

Space Measurement

• GLA

• Common Area

• Parking Area

• Parking Index/Ratio

Legal Issues

• Zoning / land use codes

– WWW.municode.com

• Cross access and easements

• Restrictive covenents

• Exclusive use restrictions

• Co-tenancy

http://www.municode.com/

Tenant’s Financially Feasible Rent • Identification of retail-line-of-trade (4 digit NAICS)

• Define trade area – delineate geography on map

• Allocate disposable household income by NAICS code (ESRI program/report)

• Adjust for leakage and displaced sales.

• Allocate trade area sales amongst competing points of supply in trade area using gravity model

• Result is Potential sales for tenant at subject location

• Using gross margin for tenant/retail line-of-trade derive financially feasible rent

Identification of retail-line-of-trade (4 digit NAICS)


4411 Automobile Dealers

4412 Other Motor Vehicle Dealers

4413 Automotive Parts, Accessories, and Tire Stores

4421 Furniture Stores

4422 Home Furnishings Stores

4431 Electronics and Appliance Stores

4441 Building Material and Supplies Dealers

4442 Lawn and Garden Equipment and Supplies Stores

4451 Grocery Stores

4452 Specialty Food Stores

4453 Beer, Wine, and Liquor Stores

4461 Health and Personal Care Stores

4471 Gasoline Stations

4481 Clothing Stores

4482 Shoe Stores

4483 Jewelry, Luggage, and Leather Goods Stores

4511 Sporting Goods, Hobby, and Musical Instrument Stores

4512 Book Stores and News Dealers

4521 Department Stores

4529 Other General Merchandise Stores

4531 Florists

4532 Office Supplies, Stationery, and Gift Stores

4533 Used Merchandise Stores

4539 Other Miscellaneous Store Retailers

4541 Electronic Shopping and Mail-Order Houses

4542 Vending Machine Operators

4543 Direct Selling Establishments

7223 Special Food Services (Caterers, Mobile Food Services)

7224 Drinking Places (Alcoholic Beverages)

7225 Restaurants and Other Eating Places

Identification of retail-line-of-trade (4 digit NAICS)








Ralston’s Rules for retail trade areas

1) Radius – ½ distance to next competing

point of supply


3) Custom polygon based on physical

boundaries and road network








Potential Demand within Trade Area

• Use ESRI Retail Market Place Profile report to estimate potential sales within trade area








Adjust for Leakage

$$$$ $$$$

Adjust for Leakage

• Leakage

$$$$ $$$$

Adjust for Displaced Sales

$$$$ $$$$

Adjust for Displaced Sales

• Displaced Sales

$$$$

$$$$

Displaced Sales Example

http://www.youtube.com/watch?v=0JnJp4t8YxY&feature=plcp

http://www.youtube.com/watch?v=0JnJp4t8YxY&feature=plcp

Site Plan

Restaurants

Hotels

Subject Property

LEGOLAND FLORIDA Market Area Map

LEGOLAND Vicinity 2010 Traffic Counts (AADT)

http://www2.dot.state.fl.us/FloridaTrafficOnline/viewer.html

26,000

Zoning

http://www.mywinterhaven.com/documents/ExistingFLUMap.pdf








Use Gravity Model to allocate sales amongst competing points of supply

Gravity Model

• Retail Gravity Model

A gravity model is used to estimate dollar flows to or the sale/revenue potential of competing retail establishments in a given geographic market.

!(!(

!(

1.0 Miles1.

0 M

iles

2.0 Miles

Neighborhood "X"

Store "A" 14,000 SqFt.

Store "B" 20,000 SqFt.

Store "C" 100,000 SqFt.

Store Size/Distance to Store2

Sum(Store Size/Distance to Store2)

Capture (or probability of visiting store)

=

Store AStore BStore C

14,000 Square Feet / 1.02 Miles to Target Neighborhood



===

14,00020,00025,000

59,000

1. Calculate Sum(Store Size/Distance to Store)

Probability of Visiting Store AProbability of Visiting Store BProbability of Visiting Store C

( 14,000 Square Feet / 1.0 Miles2 to Target Neighborhood) / 59,000

( 20,000 Square Feet / 1.0 Miles2 to Target Neighborhood) / 59,000

(100,000 Square Feet / 2.0 Miles2 to Target Neighborhood) / 59,000

===

0.23720.33890.4237

===

Conclusions

The probability that consumers will visit store "B" is higher than store "A" even though they are the same distance away because store "B" is larger.

It is more likely that store "C" will be visited even though it is twice as far away becauseit is far bigger than the other two stores.

2. Calculate Probability That Neighborhood Residents Will Visit Each Store

Lake Fairview

Lake Killarney

Lake Bell

L Lake Fairview

Lake Shadow

Block Group X















Gross Margin Analysis

• Potential sales at subject location/site

• Apply gross margin % to potential sales

• Adjust rental range based on gross margin

factor

Financially Feasible Rent

• Consider rent as component of occupancy

cost

– Is rent NNN?

– Adjust for range of CAM

• High to low

• Conclude financially feasible rent

New Retail Real Estate Valuation Perspective

• Traditional valuation approach – Comparable sales

– Replacement cost

– Income

• Current practice provides for income approach to be based on current rent and consideration of comparable rent

• New approach – “bottom up” based on tenant’s perspective, i.e., Tenant Financial Feasibility for subject location

• Tenant’s financially feasible rent (“TFF rent”) at subject location based on potential sales (demand)

• TFF rent becomes alternative input to income valuation approach








ESRI Report

• Allocate disposable household income by NAICS code (ESRI program/report – modification/expansion of Retail MarketPlace Profile)

– NAICS code for retail (44-45 & 722)

• Adjust current Retail MarketPlace Profile report to include new NAICS list for retail

– NAICS code for certain non-retail neighborhood services (see new NAICS list)

• Perhaps the calculation is allocation of disposable income based on expenditure characteristics under ESRI Tapestry Segmentation of 65 unique market segments

Retail Case Study

Retail Case Study - Overview

• Market, Location/Site, Political/Legal and Financial Analysis for small retail (development) property

• The case follows a “user in search of site” process – i.e., a user is searching for a location for a new store and then progresses to a “site in search of user” process.

• We wrap up with a financial analysis, including a development pro-forma and front-door/back-door calculations.

• Apply the CCIM Real Estate Feasibility Model

– Market Analysis

– Location/Site Analysis

– Political/Legal Analysis

– Financial Analysis

• Use the model to make a go/no-go decision and adjust to meet the market opportunity

• Use the elements of the Strategic Analysis Model to make an effective user (build-to-suit developer) decision

Retail Case Study Objectives

Financial Analysis

Market (Demand/Supply)

Analysis

Location, Site &

Building Analysis

Political & Legal

Analysis

Strategic Analysis

•Goals and Objectives

•Alternatives

•Decision Criteria

•“Go/No Go” Decision

Points

CCIM Real Estate Feasibility

Model

Feasibility Process – “Step by Step”

I. Analyze Market Area and Submarket (Trade Area) – Use zip codes and Gap Analysis using NAICS retail line of

trade classification

II. Location and Site Analysis – Identify potential sites

– Evaluate demographics and associated growth for trade area

– Trade area retail gap analysis for dollar store using NAICS/retail line of trade

III. Political and Legal Analysis

IV. Financial Analysis – Determine typical rent for dollar stores

– Identify potential tenants for excess space and typical rents

– Review project budget

– Perform developer financial feasibility analysis

“Think like a CCIM”

• Theory -> gap analysis – find market and location where demand (minimum threshold population or households) exceeds supply

• Target customer (demographic data) – Lower middle income

– Small town – small stores

– “Mobile home” mentality

• Orange County – “local market knowledge” hypotheses ->

population growth in East Orange County, not as much new retail development, seems like dollar store customer

Background

• Orlando MSA (a/k/a Orlando-Kissimmee-Sanford, FL Metropolitan Statistical Area) – Lake, Osceola, Orange and Seminole counties

(a/k/a Region)

• Site selection for a dollar store

• “Low hanging fruit” strategy – New relationship, find one site quickly before

spending time to fully analyze market (i.e., map all store locations, etc.)

– Geography “funnel” • Region: Orlando MSA

• Market

• Submarket

• Trade Area

Orlando MSA

Orange County Orlando MSA FL USA 2010 Summary Population 1,118,349 2,130,826 18,917,612 311,212,863 Households 412,610 798,378 7,448,581 116,761,140 Families 265,541 535,736 4,882,567 78,333,359 Average Household Size 2.65 2.63 2.48 2.59 Owner Occupied HUs 247,617 526,108 5,182,698 76,868,769 Renter Occupied HUs 164,993 272,270 2,265,883 39,892,371 Median Age 34.4 36.9 41.4 37.0

Households by Income - 2010 < $15,000 40,392 76,650 914,255 13,324,537 $15,000 - $24,999 38,021 74,296 770,097 10,943,687 $25,000 - $34,999 43,836 85,229 881,105 11,375,270 $35,000 - $49,999 67,582 129,290 1,164,947 17,500,292 $50,000 - $74,999 93,129 186,342 1,615,564 25,175,713 $75,000 - $99,999 63,089 113,237 974,111 16,451,401 $100,000 - $149,999 43,664 89,647 728,238 13,940,570 $150,000 - $199,000 10,780 20,426 177,590 3,980,482 $200,000+ 12,117 23,261 222,640 4,068,037 Median Household Income $53,545 $53,598 $49,910 $54,442 Average Household Income $67,530 $67,452 $64,516 $70,173 Per Capita Income $25,257 $25,527 $25,768 $26,739

Households by Income (percentage) - 2010 < $15,000 9.79% 9.60% 12.27% 11.41% $15,000 - $24,999 9.21% 9.31% 10.34% 9.37% $25,000 - $34,999 10.62% 10.68% 11.83% 9.74% $35,000 - $49,999 16.38% 16.19% 15.64% 14.99% $50,000 - $74,999 22.57% 23.34% 21.69% 21.56% $75,000 - $99,999 15.29% 14.18% 13.08% 14.09% $100,000 - $149,999 10.58% 11.23% 9.78% 11.94% $150,000 - $199,000 2.61% 2.56% 2.38% 3.41% $200,000+ 2.94% 2.91% 2.99% 3.48%

www.stdb.com www.esri.com

Orlando MSA + Brevard County

Orange County Zip Codes

Market Analysis

• Hypothesis of Market Area to begin analysis

• Use map

– Focus on 6 East Orange County zip codes:

• 32817

• 32826

• 32820

• 32825

• 32828

• 32833

6 East Orange County zip codes

Dollar Store Criteria

• Site Criteria – Located along retail corridor with good traffic

– High visibility

– Full ingress and egress

– Food store anchored neighborhood shopping centers, convenience strip centers, freestanding or storefront locations

– Conveniently located to value oriented, low to middle income customers

• Market Demographics – Median household income – less than $75,000

– Trade area population – at least 4,500

• Basic building requirements – 7,000 – 10,000 SF

– Customer friendly parking (minimum 25 – 30 cars)

– Building and pylon signage to accommodate retail store

– Accessible truck delivery (53 FT trailer, plus truck = 73 FT)

– Paved dumpster pad

Task 1-Define Market Area

• Map view of Orange County, create study

area with 6 zip codes

– 32817,32820,32825,32826,32828, 32833

• STDB Reports

– Demographic and Income Profile

– Lifestyle Report (Tapestry)

– Retail MarketPlace Profile

Summary 2000 2008 2013 Population 131,442 192,289 226,045 Households 45,861 66,579 78,176 Families 30,962 45,065 52,334 Average Household Size 2.76 2.81 2.82 Owner Occupied HUs 30,663 47,359 55,283 Renter Occupied HUs 15,198 19,220 22,893 Median Age 29.5 31.4 32.4

Trends: 2008-2013 Annual Rate Area National

Population 3.29% 1.23% Households 3.26% 1.26% Families 3.04% 1.05% Owner HHs 3.14% 1.07% Median Household Income 2.62% 3.19%

2000 2008 2013 Households by Income Number Percent Number Percent Number Percent

< $15,000 5,121 11.1% 4,805 7.2% 5,008 6.4% $15,000 - $24,999 5,357 11.7% 5,106 7.7% 4,281 5.5% $25,000 - $34,999 6,283 13.7% 5,318 8.0% 4,756 6.1% $35,000 - $49,999 8,686 18.9% 9,879 14.8% 7,896 10.1% $50,000 - $74,999 10,487 22.8% 15,506 23.3% 19,240 24.6% $75,000 - $99,999 5,537 12.1% 11,915 17.9% 13,155 16.8% $100,000 - $149,999 3,392 7.4% 10,041 15.1% 15,681 20.1% $150,000 - $199,999 661 1.4% 2,426 3.6% 4,794 6.1% $200,000+ 423 0.9% 1,583 2.4% 3,365 4.3%

Median Household Income $45,277 $61,706 $70,227

Average Household Income $53,803 $73,471 $86,413

Per Capita Income $19,200 $25,880 $30,310

2000 2008 2013

Race and Ethnicity Number Percent Number Percent Number Percent White Alone 101,727 77.4% 135,886 70.7% 151,432 67.0% Black Alone 9,408 7.2% 18,400 9.6% 23,780 10.5% American Indian Alone 425 0.3% 680 0.4% 824 0.4% Asian Alone 5,502 4.2% 10,180 5.3% 13,346 5.9% Pacific Islander Alone 104 0.1% 172 0.1% 216 0.1% Some Other Race Alone 10,037 7.6% 19,560 10.2% 26,912 11.9% Two or More Races 4,242 3.2% 7,411 3.9% 9,535 4.2% Hispanic Origin (Any Race) 30,193 23.0% 59,505 30.9% 82,101 36.3%

Lifestyle Report (Tapestry)

Retail Marketplace Profile

Retail Marketplace Profile

Task 1a & 1b: Discussion of Solutions –

STBD Reports – 6 zip codes • Demographic and Income Profile

– Pop & HH (more than adequate – should be a location opportunity within market)

– Median HH income $61,706 (above USA / lower is better)

– 2008-2013 growth 3.29% vs 1.23% (USA)

– Race and Ethnicity – significant and growing Hispanic population (see Family Dollar 10-k quote next slide)

• Lifestyle Report (Tapestry)

– No clear conclusions

• Retail MarketPlace Profile

– Gap represents large opportunity!

– NAICS 4529 (dollar store) – positive Gap!

Quote from Family Dollar 10-K

Task 2a: Use Retailer Web site to locate

stores/ (competing points of supply)

• Check via store locator function at retailer’s

web sites (zip 32826)

– http://www.dollargeneral.com/OurStores/Pages/

StoreLocator.aspx

– http://www.familydollar.com/stores.aspx?locator

=loc



http://www.familydollar.com/stores.aspx?locator=loc








StoreLocator.aspx


=loc










StoreLocator.aspx


=loc

• Create study area and map for DG @ 10619

E COLONIAL DR, Orlando, FL, 32817







• Check via store locator function at retailer’s web sites (zip 32826)

– http://www.dollargeneral.com/OurStores/Pages/StoreLocator.aspx

– http://www.familydollar.com/stores.aspx?locator=loc

• Create study area and map for DG @ 10619 E COLONIAL DR, Orlando, FL, 32817

• Conclusion: considering “spacing” (move away from closest competing point of supply) zero-in on zip code 32820




Task 2b: Use STBD Reports to “zero-in”

on 2 zip codes

• Test hypothesis that eastern area of market has best potential – zip codes 32820 & 32833

• Create STDB study area and run reports:


– Lifestyle Report (Tapestry)


6 Zip Code Market


Zip codes 32820, 32833

Summary 2000 2008 2013

Population 8,015 14,227 17,863 Households 2,862 5,175 6,506 Families 2,156 3,774 4,657 Average Household Size 2.80 2.75 2.75 Owner Occupied HUs 2,197 4,320 5,408 Renter Occupied HUs 665 855 1,098 Median Age 35.9 37.8 37.8

Trends: 2008-2013 Annual Rate Area National

Population 4.66% 1.23% Households 4.68% 1.26% Families 4.29% 1.05% Owner HHs 4.59% 1.07% Median Household Income 2.66% 3.19%

2000 2008 2013

Households by Income Number Percent Number Percent Number Percent

< $15,000 350 12.3% 493 9.5% 552 8.5% $15,000 - $24,999 410 14.4% 572 11.1% 473 7.3% $25,000 - $34,999 423 14.8% 459 8.9% 548 8.4% $35,000 - $49,999 588 20.6% 1,091 21.1% 656 10.1% $50,000 - $74,999 498 17.5% 1,106 21.4% 2,192 33.7% $75,000 - $99,999 336 11.8% 700 13.5% 846 13.0% $100,000 - $149,999 168 5.9% 530 10.2% 933 14.3% $150,000 - $199,999 43 1.5% 112 2.2% 145 2.2% $200,000+ 33 1.2% 112 2.2% 161 2.5%




2000 2008 2013

Race and Ethnicity Number Percent Number Percent Number Percent

White Alone 7,174 89.5% 12,107 85.1% 14,673 82.1% Black Alone 232 2.9% 584 4.1% 860 4.8% American Indian Alone 47 0.6% 104 0.7% 144 0.8% Asian Alone 225 2.8% 557 3.9% 835 4.7%

Pacific Islander Alone 8 0.1% 18 0.1% 25 0.1%

Some Other Race Alone 180 2.2% 498 3.5% 800 4.5% Two or More Races 151 1.9% 359 2.5% 526 2.9% Hispanic Origin (Any Race) 703 8.8% 1,982 13.9% 3,207 18.0%

In Style In Style residents live in affluent neighborhoods of metropolitan areas. More suburban than urban, they nevertheless embrace an urban lifestyle. Townhome ownership is more than double that of the national level; however, more than half of the households are traditional single-family homes. Labor force participation is high, and professional couples predominate. The median household income is $72,326. Nearly one-third of these households include children. The median age is 40.3 years. In Style residents are computer savvy; they use the Internet daily to research information, track investments, or shop. They own a diverse investment portfolio, contribute to retirement savings plans, and hold long-term care and life insurance policies. They enjoy going to the beach, snorkeling, playing golf, casino gambling, and domestic travel. Crossroads Young families living in mobile homes typify Crossroads neighborhoods, found in small towns throughout the South, Midwest, and West. These growing communities are home to married-couple and single-parent families. The median age is 32.1 years. Homeownership is at 75 percent, and the median home value is $73,224. More than half of the householders live in mobile homes; 36 percent live in single-family dwellings. Employment is chiefly in the manufacturing, construction, retail trade, and service industries. Many homes have dogs. Residents generally shop at discount stores but also frequent convenience stores. They prefer domestic cars and trucks, often buying and servicing used vehicles. Residents go fishing, attend auto races, participate in auto racing, and play the lottery. An annual family outing to SeaWorld is common.

Demand Supply Leakage/Surplus Number of Industry Group (Retail Potential) (Retail Sales) Retail Gap Factor Businesses Motor Vehicle & Parts Dealers (NAICS 441) $28,163,377 $7,912,195 $20,251,182 56.1 14 Automobile Dealers (NAICS 4411) $23,846,125 $4,179,716 $19,666,409 70.2 8 Other Motor Vehicle Dealers (NAICS 4412) $2,472,896 $3,009,032 -$536,136 -9.8 3 Auto Parts, Accessories, and Tire Stores (NAICS 4413) $1,844,356 $723,447 $1,120,909 43.7 3

Furniture & Home Furnishings Stores (NAICS 442) $4,655,061 $526,413 $4,128,648 79.7 3 Furniture Stores (NAICS 4421) $2,727,880 $0 $2,727,880 100.0 0 Home Furnishings Stores (NAICS 4422) $1,927,181 $526,413 $1,400,768 57.1 3

Electronics & Appliance Stores (NAICS 443/NAICS 4431) $4,616,574 $968,083 $3,648,491 65.3 4

Bldg Materials, Garden Equip. & Supply Stores (NAICS 444) $4,550,804 $179,293 $4,371,511 92.4 2 Building Material and Supplies Dealers (NAICS 4441) $4,191,052 $38,889 $4,152,163 98.2 1 Lawn and Garden Equipment and Supplies Stores (NAICS 4442) $359,752 $140,404 $219,348 43.9 1

Food & Beverage Stores (NAICS 445) $21,042,929 $10,352,832 $10,690,097 34.0 5 Grocery Stores (NAICS 4451) $20,057,661 $10,352,832 $9,704,829 31.9 5 Specialty Food Stores (NAICS 4452) $526,706 $0 $526,706 100.0 0 Beer, Wine, and Liquor Stores (NAICS 4453) $458,562 $0 $458,562 100.0 0

Health & Personal Care Stores (NAICS 446/NAICS 4461) $4,470,467 $857,522 $3,612,945 67.8 2

Gasoline Stations (NAICS 447/NAICS 4471) $16,123,448 $9,108,997 $7,014,451 27.8 5

Clothing and Clothing Accessories Stores (NAICS 448) $7,232,911 $0 $7,232,911 100.0 0 Clothing Stores (NAICS 4481) $5,493,651 $0 $5,493,651 100.0 0 Shoe Stores (NAICS 4482) $1,075,498 $0 $1,075,498 100.0 0 Jewelry, Luggage, and Leather Goods Stores (NAICS 4483) $663,762 $0 $663,762 100.0 0

Sporting Goods, Hobby, Book, and Music Stores (NAICS 451) $1,986,121 $187,998 $1,798,123 82.7 2 Sporting Goods/Hobby/Musical Instrument Stores (NAICS 4511) $916,963 $187,998 $728,965 66.0 2 Book, Periodical, and Music Stores (NAICS 4512) $1,069,158 $0 $1,069,158 100.0 0

General Merchandise Stores (NAICS 452) $12,358,783 $0 $12,358,783 100.0 0 Department Stores Excluding Leased Depts. (NAICS 4521) $6,601,616 $0 $6,601,616 100.0 0 Other General Merchandise Stores (NAICS 4529) $5,757,167 $0 $5,757,167 100.0 0

Miscellaneous Store Retailers (NAICS 453) $2,128,756 $1,431,892 $696,864 19.6 10 Florists (NAICS 4531) $289,906 $239,040 $50,866 9.6 4 Office Supplies, Stationery, and Gift Stores (NAICS 4532) $946,945 $69,371 $877,574 86.3 1 Used Merchandise Stores (NAICS 4533) $51,689 $58,368 -$6,679 -6.1 2 Other Miscellaneous Store Retailers (NAICS 4539) $840,216 $1,065,113 -$224,897 -11.8 3

Nonstore Retailers (NAICS 454) $2,616,961 $0 $2,616,961 100.0 0 Electronic Shopping and Mail-Order Houses (NAICS 4541) $1,673,276 $0 $1,673,276 100.0 0 Vending Machine Operators (NAICS 4542) $120,705 $0 $120,705 100.0 0 Direct Selling Establishments (NAICS 4543) $822,980 $0 $822,980 100.0 0

Food Services & Drinking Places (NAICS 722) $18,933,198 $5,406,865 $13,526,333 55.6 9 Full-Service Restaurants (NAICS 7221) $10,125,874 $495,829 $9,630,045 90.7 3 Limited-Service Eating Places (NAICS 7222) $6,253,318 $4,649,165 $1,604,153 14.7 5 Special Food Services (NAICS 7223) $1,339,097 $0 $1,339,097 100.0 0 Drinking Places - Alcoholic Beverages (NAICS 7224) $1,214,909 $261,871 $953,038 64.5 1

Industry Group (Retail

Potential) (Retail Sales) Retail Gap Factor # of Bus

Food & Beverage Stores (NAICS 445) $21,042,929 $10,352,832 $10,690,097 34 5

Grocery Stores (NAICS 4451) $20,057,661 $10,352,832 $9,704,829 31.9 5

Specialty Food Stores (NAICS 4452) $526,706 $0 $526,706 100 0

Beer, Wine, and Liquor Stores (NAICS 4453) $458,562 $0 $458,562 100 0

General Merchandise Stores (NAICS 452) $12,358,783 $0 $12,358,783 100 0

Department Stores Excluding Leased Depts. (NAICS 4521)

$6,601,616 $0 $6,601,616 100 0

Other General Merchandise Stores (NAICS 4529) $5,757,167 $0 $5,757,167 100 0

Task 2b: Use STBD Reports to “zero-in”

on 2 zip codes

• Test hypothesis that eastern area of market has best potential – zip codes 32820 & 32833

• Demographic and Income Profile – Pop & HH: 14,227 pop / 5,175 HH

– Median HH income $49,560 (below USA -- better than 6 zip codes for our targeted use)

– 2008 – 2013 growth 4.66% vs 1.23% USA

– Race and Ethnicity – Hispanic is good

• Lifestyle Report (Tapestry) – Crossroads is very good for dollar stores

• Retail MarketPlace Profile – Gap represents large opportunity!

– NAICS 452 and 4529 (dollar store) – no competition / “gap light is green”

Location/Site Analysis Task 3: Define Location

• 1st filter location attribute for Retail – commercial corridor

– Explain why (convenience, zoning/land use, agglomeration of space)

• What is the key arterial route/commercial corridor in the market (6 zip codes) and 32820?

– SR 50/East Colonial Drive

– Use STDB hybrid map capture of market (6 zip codes)

• Display map to confirm assumption from observation

6 Zip Code Market – SR 50 Is Key

Commercial Corridor

Location/Site continued

• USE STDB map and/or Google Earth, etc.

• 2nd filter for location attribute for Retail – key

intersection is “50 yard line”

• Refer to aerial to identify Econ River drainage

basin (natural barrier)

• Major intersection east of Econ is SR 50 &

CR 419

Econ River Basin


• USE STDB map and/or Google Earth, etc.

• 2nd filter for location attribute for Retail – key

intersection is “50 yard line”

• Refer to aerial to identify Econ River drainage

basin (natural barrier)

• Major intersection east of Econ is SR 50 &

CR 419

• Conclusion/Location hypothesis: SR 50 within

½ mile of CR 419 (Chuluota RD)

Location/Site continued Task 3: Investigate Traffic Counts

• Confirm traffic on SR 50 @ CR 419

– Orange County Traffic

• http://www.orangecountyfl.net/cms/dept/pw/traffic/traffic+count+m

ethodology+and+signal+information.htm

– FDOT

• http://www.dot.state.fl.us/planning/statistics/trafficdata/

• SR 50

• CR 419 (north of SR 50/Colonial RD)

http://www.orangecountyfl.net/cms/dept/pw/traffic/traffic+count+methodology+and+signal+information.htmhttp:/www.dot.state.fl.us/planning/statistics/trafficdata/



Traffic Counts / Average Annual Daily Traffic (FDOT)

35,640

11,894

32,007


Task 3: Investigate Traffic Counts

• Confirm traffic on SR 50 @ CR 419 – Orange County Traffic

• http://www.orangecountyfl.net/cms/dept/pw/traffic/traffic+count+methodology+and+signal+information.htm

– FDOT • http://www.dot.state.fl.us/planning/statistics/trafficdata/

• SR 50 – East of CR 419 -> 32,007 AADT

– West of CR 419 -> 35,640 AADT

• CR 419 (north of SR 50/Colonial RD) – 11,894 AADT




Task 4: User Location/Site Criteria

• Before examining questions, let’s “understand the customer”

• Research site criteria for dollar stores: – http://www.dollargeneral.com/OurStores/Pages/St

oreGrowthRealEstate.aspx

– http://www.familydollar.com/RealestateManagementDivision.aspx#REMSiteAndBuildingReq

– http://www.familydollar.com/faq.aspx#Real Estate

– Confirm previous assumptions

http://www.dollargeneral.com/OurStores/Pages/StoreGrowthRealEstate.aspx

http://www.dollargeneral.com/OurStores/Pages/StoreGrowthRealEstate.aspx

http://www.familydollar.com/RealestateManagementDivision.aspx

http://www.familydollar.com/RealestateManagementDivision.aspx

http://corporate.familydollar.com/pages/realestatemanagementdivision.aspx

http://www.dollargeneral.com/OurStores/Pages/StoreGrowthRealEstate.aspx#sitepreferences

Task 4: Political and Legal

• Question 12-4 #1 -> Zoning

• Discuss how to investigate zoning (google search, etc.)

• Orange County Zoning map – Orange County FL (search zoning map)

– Maps & GIS

– Map downloads

– Zoning map

– http://www.orangecountyfl.net/Portals/0/Resources/Internet/DEPARTMENTS/Growth_Management/Zoning.pdf

http://www.orangecountyfl.net/Portals/0/Resources/Internet/DEPARTMENTS/Growth_Management/Zoning.pdf



Commercial

Task 4: Search for Potential Sites

• Use Orange County Property Appraiser web site to search for available sites

• http://paarcgis.ocpafl.org/Webmap3/default.aspx

• Consider access in refining search – SR 50 is median divided road, thus seek site with left-in

access (median break)

– Best candidate would be at an intersection – thus 2 roads for access

• Parcel should be 1 to 2 acres

• Parcels with existing structures, i.e., already developed not candidates unless little value associated with improvements

http://paarcgis.ocpafl.org/Webmap3/default.aspx


• Discuss current developments and patterns – Publix (grocery store) anchored shopping center at

NWC of SR 50 & CR 419

– Walgreens at SWC SR 50 & CR 419

• Discovery learning for other parcels

• Parcels on south side of SR 50 east of CR 419 – AZO under construction (access and depth issues)

• Parcels on north side of SR 50 are too large

• Conclusion / hypothesis: – SEC SR 50 & Cox RD (17438 E Colonial, 32820)


Task 5: Define Trade Area - SEC SR 50 & Cox RD

• Now that we have a specific potential site we can move from “formal geographies” to “functional geographies” – A trade area is a functional geography

• Trade Area defined using: – ½ distance to next occurrence of competing supply

• Cannibalization

• Map competing supply and/or next closest store of same chain (cannibalization)

• Establish preliminary boundary of trade area based on ½ distance to competing supply in each direction

• Adjust to account for road systems

Task 5: Define Trade Area STDB map &

reports for SEC SR 50 & Cox RD

• Alternative methods of defining Trade Area & Define 3 study areas:

1) Radius – ½ distance to DG store (about 6 miles) – Approx 3 mile radius


3) Custom polygon based on physical boundaries and road network (use 2 zip codes – 32820 & 32833 or draw poly)

• Reports for all 3: – Demographic and Income Profile

– Lifestyle


– Standard Site Map report






1) Radius – ½ distance to DG store (about 6 miles)

– Approx 3 mile radius

• Reports:


– Lifestyle



Summary 2000 2009 2014

Population 11,900 24,073 30,134

Households 4,312 8,354 10,371

Families 3,145 5,970 7,300

Average Household Size 2.76 2.88 2.91

Owner Occupied Housing Units 3,317 6,200 7,726

Renter Occupied Housing Units 995 2,154 2,645

Median Age 34.4 34.1 34.6

Trends: 2009-2014 Annual Rate Area State National

Population 4.59% 1.48% 0.91%

Households 4.42% 1.52% 0.94%

Families 4.10% 1.27% 0.74%

Owner Households 4.50% 1.80% 1.19%

Median Household Income 0.82% 0.82% 0.80%

2000 2009 2014


< $15,000 475 11.2% 545 6.5% 627 6.0%

$15,000 - $24,999 541 12.7% 660 7.9% 755 7.3%

$25,000 - $34,999 563 13.2% 605 7.2% 636 6.1%

$35,000 - $49,999 754 17.7% 1,351 16.2% 1,470 14.2%

$50,000 - $74,999 923 21.7% 1,824 21.8% 2,476 23.9%

$75,000 - $99,999 534 12.5% 1,319 15.8% 1,730 16.7%

$100,000 - $149,999 339 8.0% 1,363 16.3% 1,768 17.1%

$150,000 - $199,999 80 1.9% 404 4.8% 536 5.2%

$200,000+ 49 1.2% 283 3.4% 371 3.6%




2000 2009 2014

Population by Age Number Percent Number Percent Number Percent

Age 0 - 4 840 7.1% 1,940 8.1% 2,453 8.1%

Age 5 - 9 921 7.7% 1,756 7.3% 2,294 7.6%

Age 10 - 14 904 7.6% 1,622 6.7% 2,090 6.9%

Age 15 - 19 809 6.8% 1,513 6.3% 1,714 5.7%

Age 20 - 24 765 6.4% 1,389 5.8% 1,683 5.6%

Age 25 - 34 1,834 15.4% 4,218 17.5% 5,035 16.7%

Age 35 - 44 2,154 18.1% 3,703 15.4% 4,878 16.2%

Age 45 - 54 1,491 12.5% 3,413 14.2% 3,983 13.2%

Age 55 - 64 977 8.2% 2,312 9.6% 3,047 10.1%

Age 65 - 74 691 5.8% 1,301 5.4% 1,895 6.3%

Age 75 - 84 432 3.6% 680 2.8% 801 2.7%

Age 85+ 81 0.7% 224 0.9% 259 0.9%

2000 2009 2014


White Alone 10,231 86.0% 18,688 77.6% 22,210 73.7%

Black Alone 504 4.2% 1,616 6.7% 2,293 7.6%

American Indian Alone 50 0.4% 117 0.5% 156 0.5%

Asian Alone 349 2.9% 1,098 4.6% 1,590 5.3%


Some Other Race Alone 481 4.0% 1,743 7.2% 2,725 9.0%

Two or More Races 278 2.3% 794 3.3% 1,137 3.8%

Hispanic Origin (Any Race) 1,673 14.1% 5,829 24.2% 9,014 29.9%

Demand Supply Leakage/Surplus Number of Industry Group (Retail Potential) (Retail Sales) Retail Gap Factor Businesses Motor Vehicle & Parts Dealers (NAICS 441) $92,515,863 $10,335,409 $82,180,454 79.9 12 Automobile Dealers (NAICS 4411) $78,471,925 $6,594,439 $71,877,486 84.5 7 Other Motor Vehicle Dealers (NAICS 4412) $8,102,076 $2,101,747 $6,000,329 58.8 2 Auto Parts, Accessories, and Tire Stores (NAICS 4413) $5,941,862 $1,639,223 $4,302,639 56.8 3

Furniture & Home Furnishings Stores (NAICS 442) $16,073,202 $3,795,795 $12,277,407 61.8 6 Furniture Stores (NAICS 4421) $9,544,625 $2,018,766 $7,525,859 65.1 2 Home Furnishings Stores (NAICS 4422) $6,528,577 $1,777,029 $4,751,548 57.2 4

Electronics & Appliance Stores (NAICS 443/NAICS 4431) $15,331,593 $5,057,719 $10,273,874 50.4 5

Bldg Materials, Garden Equip. & Supply Stores (NAICS 444) $14,841,678 $2,600,661 $12,241,017 70.2 5 Building Material and Supplies Dealers (NAICS 4441) $13,694,741 $2,488,770 $11,205,971 69.2 3

Lawn and Garden Equipment and Supplies Stores (NAICS 4442) $1,146,937 $111,891 $1,035,046 82.2 2

Food & Beverage Stores (NAICS 445) $65,479,615 $32,536,316 $32,943,299 33.6 10 Grocery Stores (NAICS 4451) $62,378,354 $31,644,689 $30,733,665 32.7 7 Specialty Food Stores (NAICS 4452) $1,641,360 $175,892 $1,465,468 80.6 1 Beer, Wine, and Liquor Stores (NAICS 4453) $1,459,901 $715,735 $744,166 34.2 2

Health & Personal Care Stores (NAICS 446/NAICS 4461) $13,783,524 $6,457,860 $7,325,664 36.2 6


Clothing and Clothing Accessories Stores (NAICS 448) $23,373,115 $8,516,494 $14,856,621 46.6 11 Clothing Stores (NAICS 4481) $17,726,291 $6,332,700 $11,393,591 47.4 7 Shoe Stores (NAICS 4482) $3,382,717 $1,617,466 $1,765,251 35.3 2 Jewelry, Luggage, and Leather Goods Stores (NAICS 4483) $2,264,107 $566,328 $1,697,779 60.0 2

Sporting Goods, Hobby, Book, and Music Stores (NAICS 451) $6,404,452 $2,910,618 $3,493,834 37.5 7

Sporting Goods/Hobby/Musical Instrument Stores (NAICS 4511) $2,996,716 $1,215,404 $1,781,312 42.3 5

Book, Periodical, and Music Stores (NAICS 4512) $3,407,736 $1,695,214 $1,712,522 33.6 2

General Merchandise Stores (NAICS 452) $39,456,544 $31,818,937 $7,637,607 10.7 5 Department Stores Excluding Leased Depts. (NAICS 4521) $21,387,112 $25,360,958 -$3,973,846 -8.5 3 Other General Merchandise Stores (NAICS 4529) $18,069,432 $6,457,979 $11,611,453 47.3 2

Miscellaneous Store Retailers (NAICS 453) $6,828,433 $2,889,628 $3,938,805 40.5 15 Florists (NAICS 4531) $921,336 $256,450 $664,886 56.5 4 Office Supplies, Stationery, and Gift Stores (NAICS 4532) $3,108,813 $1,013,538 $2,095,275 50.8 4 Used Merchandise Stores (NAICS 4533) $173,151 $57,517 $115,634 50.1 2 Other Miscellaneous Store Retailers (NAICS 4539) $2,625,133 $1,562,123 $1,063,010 25.4 5



2) Drive-time (3, 5 & 10 min) -> aerial

• Reports: – Demographic and Income Profile

– Lifestyle


(slides focus on 5 min drive time, see exhibits for complete copies of

reports)


Summary 2000 2009 2014

Population 2,428 4,058 4,887 Households 866 1,442 1,735 Families 632 1,020 1,206 Average Household Size 2.80 2.81 2.82 Owner Occupied Housing Units 642 1,096 1,333 Renter Occupied Housing Units 224 346 402 Median Age 35.3 35.3 35.2

Trends: 2009-2014 Annual Rate Area State National

Population 3.79% 1.48% 0.91% Households 3.77% 1.52% 0.94% Families 3.41% 1.27% 0.74% Owner Households 3.99% 1.80% 1.19% Median Household Income 1.19% 0.82% 0.80%

2000 2009 2014


< $15,000 120 14.2% 128 8.9% 145 8.4% $15,000 - $24,999 122 14.4% 154 10.7% 174 10.0% $25,000 - $34,999 129 15.3% 122 8.5% 126 7.3% $35,000 - $49,999 165 19.5% 303 21.0% 326 18.8% $50,000 - $74,999 152 18.0% 305 21.2% 434 25.0% $75,000 - $99,999 86 10.2% 195 13.5% 229 13.2% $100,000 - $149,999 52 6.2% 158 11.0% 201 11.6% $150,000 - $199,999 11 1.3% 45 3.1% 58 3.3% $200,000+ 8 0.9% 32 2.2% 42 2.4%

Median Household Income $37,948 $50,762 $53,853 Average Household Income $48,628 $64,695 $67,408 Per Capita Income $17,483 $23,232 $24,132

2000 2009 2014

Population by Age Number Percent Number Percent Number Percent

Age 0 - 4 161 6.6% 300 7.4% 365 7.5%

Age 5 - 9 180 7.4% 275 6.8% 347 7.1% Age 10 - 14 190 7.8% 259 6.4% 320 6.5% Age 15 - 19 178 7.3% 265 6.5% 280 5.7% Age 20 - 24 150 6.2% 278 6.9% 316 6.5% Age 25 - 34 343 14.1% 634 15.6% 799 16.3% Age 35 - 44 431 17.8% 564 13.9% 663 13.6% Age 45 - 54 323 13.3% 608 15.0% 662 13.5%

Age 55 - 64 232 9.6% 443 10.9% 571 11.7%

Age 65 - 74 148 6.1% 261 6.4% 358 7.3% Age 75 - 84 76 3.1% 131 3.2% 158 3.2%

Age 85+ 15 0.6% 40 1.0% 48 1.0%

2000 2009 2014


White Alone 2,186 90.0% 3,391 83.6% 3,917 80.2% Black Alone 65 2.7% 182 4.5% 258 5.3% American Indian Alone 13 0.5% 28 0.7% 37 0.8% Asian Alone 49 2.0% 134 3.3% 193 4.0%


Some Other Race Alone 62 2.6% 194 4.8% 302 6.2% Two or More Races 52 2.1% 124 3.1% 175 3.6% Hispanic Origin (Any Race) 244 10.0% 742 18.3% 1,141 23.3%

Industry Group (Retail Potential) (Retail Sales) Retail Gap Factor

Motor Vehicle & Parts Dealers (NAICS 441) $5,890,130 $3,527,219 $2,362,911 25.1 Automobile Dealers (NAICS 4411) $4,986,765 $1,674,833 $3,311,932 49.7 Other Motor Vehicle Dealers (NAICS 4412) $519,892 $1,236,234 -$716,342 -40.8

Auto Parts, Accessories, and Tire Stores (NAICS 4413) $383,473 $616,152 -$232,679 -23.3

Furniture & Home Furnishings Stores (NAICS 442) $979,212 $390,622 $588,590 43.0 Furniture Stores (NAICS 4421) $575,712 $119,677 $456,035 65.6 Home Furnishings Stores (NAICS 4422) $403,500 $270,945 $132,555 19.7

Electronics & Appliance Stores (NAICS 443/NAICS 4431) $963,933 $521,744 $442,189 29.8

Bldg Materials, Garden Equip. & Supply Stores (NAICS 444) $942,306 $188,393 $753,913 66.7

Building Material and Supplies Dealers (NAICS 4441) $867,871 $169,942 $697,929 67.2 Lawn and Garden Equipment and Supplies Stores (NAICS 4442)

$74,435 $18,451 $55,984 60.3

Food & Beverage Stores (NAICS 445) $4,343,679 $2,379,269 $1,964,410 29.2 Grocery Stores (NAICS 4451) $4,140,398 $2,326,412 $1,813,986 28.1 Specialty Food Stores (NAICS 4452) $108,770 $10,427 $98,343 82.5 Beer, Wine, and Liquor Stores (NAICS 4453) $94,511 $42,430 $52,081 38.0

Health & Personal Care Stores (NAICS 446/NAICS 4461) $926,445 $1,043,596 -$117,151 -5.9

Gasoline Stations (NAICS 447/NAICS 4471) $3,346,938 $2,875,487 $471,451 7.6

Clothing and Clothing Accessories Stores (NAICS 448) $1,498,368 $504,876 $993,492 49.6

Clothing Stores (NAICS 4481) $1,137,550 $375,416 $762,134 50.4 Shoe Stores (NAICS 4482) $222,516 $95,887 $126,629 39.8

Jewelry, Luggage, and Leather Goods Stores (NAICS 4483) $138,302 $33,573 $104,729 60.9

Sporting Goods, Hobby, Book, and Music Stores (NAICS 451) $411,197 $214,981 $196,216 31.3




2) Drive-time (3, 5 & 10 min) -> aerial


– Lifestyle


(slides focus on 5 min drive time, see exhibits for complete copies

of reports)

-> 5 min drive time is too small …. 10 minute seems not to fit



Answer is a “custom polygon trade area”

3) Custom polygon based on physical boundaries and road network (use 2 zip codes – 32820 & 32833 or draw poly)


– Lifestyle


In order to have consistent solutions we have adopted the 2 zip codes as

“custom polygon” … if everyone drew their own --- this is what should

happen in the field -- we would all have slightly different answers


Summary 2000 2009 2014 Population 6,170 10,142 12,194 Households 2,212 3,670 4,423 Families 1,642 2,625 3,104 Average Household Size 2.79 2.76 2.76 Owner Occupied Housing Units 1,674 2,898 3,530 Renter Occupied Housing Units 538 772 894 Median Age 35.5 36.3 35.8

Trends: 2009-2014 Annual Rate Area 0 National Population 3.75% 0.00% 0.91% Households 3.80% 0.00% 0.94% Families 3.41% 0.00% 0.74% Owner Households 4.02% 0.00% 1.19% Median Household Income 1.03% 0.00% 0.80%

2000 2009 2014 Households by Income Number Percent Number Percent Number Percent

< $15,000 291 13.3% 350 9.5% 400 9.0% $15,000 - $24,999 321 14.7% 407 11.1% 470 10.6% $25,000 - $34,999 343 15.7% 334 9.1% 353 8.0% $35,000 - $49,999 465 21.3% 863 23.5% 935 21.1% $50,000 - $74,999 367 16.8% 807 22.0% 1,193 27.0% $75,000 - $99,999 226 10.4% 451 12.3% 490 11.1% $100,000 - $149,999 115 5.3% 320 8.7% 403 9.1% $150,000 - $199,999 29 1.3% 74 2.0% 94 2.1% $200,000+ 23 1.1% 65 1.8% 86 1.9%

Median Household Income $37,698 $48,155 $50,698 Average Household Income $48,019 $59,400 $61,303 Per Capita Income $17,020 $21,459 $22,196

2000 2009 2014 Population by Age Number Percent Number Percent Number Percent

Age 0 - 4 394 6.4% 704 6.9% 855 7.0% Age 5 - 9 467 7.6% 657 6.5% 823 6.7% Age 10 - 14 496 8.0% 635 6.3% 777 6.4% Age 15 - 19 477 7.7% 693 6.8% 710 5.8% Age 20 - 24 364 5.9% 742 7.3% 853 7.0% Age 25 - 34 833 13.5% 1,478 14.6% 1,963 16.1% Age 35 - 44 1,095 17.7% 1,347 13.3% 1,496 12.3% Age 45 - 54 869 14.1% 1,587 15.6% 1,702 14.0% Age 55 - 64 627 10.2% 1,194 11.8% 1,542 12.6% Age 65 - 74 372 6.0% 684 6.7% 939 7.7% Age 75 - 84 148 2.4% 335 3.3% 417 3.4% Age 85+ 28 0.5% 87 0.9% 117 1.0%

2000 2009 2014 Race and Ethnicity Number Percent Number Percent Number Percent

White Alone 5,585 90.5% 8,665 85.4% 10,051 82.4% Black Alone 151 2.4% 383 3.8% 544 4.5% American Indian Alone 38 0.6% 84 0.8% 112 0.9% Asian Alone 135 2.2% 336 3.3% 481 3.9% Pacific Islander Alone 5 0.1% 11 0.1% 14 0.1% Some Other Race Alone 132 2.1% 377 3.7% 586 4.8% Two or More Races 124 2.0% 287 2.8% 406 3.3% Hispanic Origin (Any Race) 545 8.8% 1,562 15.4% 2,421 19.9%

Industry Group (Retail Potential) (Retail Sales) Retail Gap Factor Motor Vehicle & Parts Dealers (NAICS 441) $19,113,689 $7,106,818 $12,006,871 45.8 Automobile Dealers (NAICS 4411) $16,172,819 $3,394,923 $12,777,896 65.3 Other Motor Vehicle Dealers (NAICS 4412) $1,704,056 $2,711,841 -$1,007,785 -22.8 Auto Parts, Accessories, and Tire Stores (NAICS 4413) $1,236,814 $1,000,054 $236,760 10.6

Furniture & Home Furnishings Stores (NAICS 442) $3,100,941 $457,691 $2,643,250 74.3 Furniture Stores (NAICS 4421) $1,818,210 $0 $1,818,210 100.0 Home Furnishings Stores (NAICS 4422) $1,282,731 $457,691 $825,040 47.4

Electronics & Appliance Stores (NAICS 443/NAICS 4431) $3,093,896 $734,237 $2,359,659 61.6

Bldg Materials, Garden Equip. & Supply Stores (NAICS 444) $3,039,239 $174,029 $2,865,210 89.2

Building Material and Supplies Dealers (NAICS 4441) $2,795,991 $67,549 $2,728,442 95.3

Lawn and Garden Equipment and Supplies Stores (NAICS 4442) $243,248 $106,480 $136,768 39.1

Food & Beverage Stores (NAICS 445) $14,183,952 $7,132,896 $7,051,056 33.1 Grocery Stores (NAICS 4451) $13,524,227 $7,132,896 $6,391,331 30.9 Specialty Food Stores (NAICS 4452) $355,136 $0 $355,136 100.0 Beer, Wine, and Liquor Stores (NAICS 4453) $304,589 $0 $304,589 100.0

Health & Personal Care Stores (NAICS 446/NAICS 4461) $3,025,857 $1,243,155 $1,782,702 41.8

Gasoline Stations (NAICS 447/NAICS 4471) $10,994,201 $6,505,653 $4,488,548 25.6

Clothing and Clothing Accessories Stores (NAICS 448) $4,852,499 $0 $4,852,499 100.0 Clothing Stores (NAICS 4481) $3,686,226 $0 $3,686,226 100.0 Shoe Stores (NAICS 4482) $726,265 $0 $726,265 100.0

Jewelry, Luggage, and Leather Goods Stores (NAICS 4483) $440,008 $0 $440,008 100.0

Sporting Goods, Hobby, Book, and Music Stores (NAICS 451) $1,331,722 $123,400 $1,208,322 83.0

Sporting Goods/Hobby/Musical Instrument Stores (NAICS 4511) $616,993 $123,400 $493,593 66.7

Book, Periodical, and Music Stores (NAICS 4512) $714,729 $0 $714,729 100.0 General Merchandise Stores (NAICS 452) $8,324,512 $0 $8,324,512 100.0

Department Stores Excluding Leased Depts. (NAICS 4521) $4,438,404 $0 $4,438,404 100.0

Other General Merchandise Stores (NAICS 4529) $3,886,108 $0 $3,886,108 100.0

Task 6: Political/Legal Issues

• Zoning / land use codes

– WWW.municode.com

• Other issues to consider

– Cross access and easements

– Restrictive covenants

– Exclusive use restrictions

– Co-tenancy


Site / Building Envelope Analysis

• How much can you build?

• Parcel is approximately 1.8 acres (79,000

SF)

• Zoning code (C-1)

– www.municode.com

– Go to Orange County zoning


Article VII-DIVISION 3. C-1 RETAIL

COMMERCIAL DISTRICT

(1) Maximum floor area ratio (FAR): 3.0.

(2) Minimum lot size: Six thousand (6,000) square feet.

(3) Minimum width: Eighty (80) feet on major streets as identified in article XV, sixty (60)

feet for all other streets. Corner lots shall be one hundred (100) feet on major streets

as identified in article XV, eighty (80) feet on all other streets.

(4) Minimum front yard: Twenty-five (25) feet, or major street setback as specified in

article XV, whichever is greater.

(5) Minimum side yard: Zero (0) feet, fifteen (15) feet when abutting a residential district,

fifteen (15) feet from a side street or as otherwise provided in article XV.

(6) Minimum rear yard: Twenty (20) feet.

(7) Minimum setbacks: Fifty (50) feet from the normal high water elevation on every

natural surface water body.

(8) Minimum floor area: Five hundred (500) square feet.

(9) Minimum open space shall be in accordance with Orange County Code chapter 24,

article II, open space regulations.

Sec. 38-1476.

Quantity of off-street parking.

• General business establishments, such as hardware, furniture, appliance, jewelry, apparel stores, etc. 1 space for each 300 square feet of gross floor area; provided, however, that no use shall have less than 3 spaces.

• Big box development – 4 spaces for each 1,000 square feet of gross floor

area, but not to exceed 5 spaces for each 1,000 square feet

Sec. 24-29-Open Space Requirements

• Commercial--Twenty (20) percent

• Industrial--Fifteen (15) percent

• Institutional--Thirty-five (35) percent

• Big box development: – One (1) story and two hundred thousand

(200,000) square feet or greater: Thirty (30) percent.

– One (1) story and less than two hundred thousand (200,000) square feet: Twenty-five (25) percent.

How much can you build on this site?

• Use Zoning code (C-1) info

– www.municode.com

– Go to Orange County zoning

• How much can you build on this site?

– Property appraiser -> 1.83 acres or 79,000 SF

– Retail development “rule of thumb” – GLA @ up to

20% of site (efficiency increases with larger size

building) thus can build about 15,000 SF or so

– Dollar store (8,000 – 9,000 SF) and an additional

5,000 SF or so

– Site Selection Checklist


Site Analysis

• Site Selection Checklist

– Location Data

– Site Data

– Owner/Financial/Legal Data

– Zoning/Utilities/Comps

Location

Address/description of location

Street Address ( ### Street, City, County, Zip)

Intersection (i.e., SEC of XXX/XXX, if not at corner, distance &

direction from)

Map (local streets & arterial/regional routes)

Aerial

Neighboring land use

Adjacent land use

Land use beyond (0.25 to 1.0 mile)

Panoramic views from target site

Quality/stability of neighborhood

Competition map

Type, size, etc.

Trade area

Map

Demographics

Traffic Count

5 YR Growth (within 2 to 3 miles)

Pending subdivisions, PUDs, etc. (Table of Future Growth form)

Other

Site Selection Checklist: Location

Site Data (visual inspection)

Dimension (frontage x depth)

Size (SF or Acres)

Plat map (property tax assessor)

Legal description

Current structures on site, if any (description, SF, etc.)

Ingress & egress

Median cut?

Deceleration lane

Traffic signal

Visibility

Topographical features

Visual

Survey

Subsoil conditions

Environmental constraints

Wetlands -> useable SF

Restrictions, easements, encumbrances

Site Selection Checklist: Site Data

Owner/Financial/Legal

Asking price and terms

Conditions of sale

Time on market

Property tax assessor's record

Property taxes & assessed value

Sales history

Value of improvements, size, etc.

Mortgage

Legal

Legal description/title examination

Easements & restrictions

Filings of record

Title cost

Recording taxes

Owner

Preliminary title search

Public records search

Other

Site Selection Checklist:

Owner/Financial/Legal

Zoning/Building

Zoning

Current zoning and permitted use

Zoning authority

Planning commission

Local government

Utilities & Infrastructure

Location of:

water mains

sewer mains

Electricity supply lines

Alternative Site & Comps

Comparable sales (for subject)

Alternative site(s)

Site Selection Checklist:

Zoning/Utilities/Comps

Task 7: Determine Typical Rents for Dollar

Stores

• MarketPlace Profile report does not help

determine rents!

• Where do you get comparable rent info?

– Check the market … look for other properties for

sale

– “Reverse engineer”

• Potential sales (average sales per store)

• Rent as a relationship to gross margin

Loopnet Summary of sample Dollar Stores for sale in Florida

Tenant Address City ST Zip SF Rent Rent/SF

Family Dollar 4784 N Carl G Hwy Hernando FL 34442 8,320 117,863 14.17

Dollar General 580 W Palm DR Florida City FL 33034 9,100 156,955 17.25

Family Dollar 1058 Berkley RD Auburndale FL 33823 9,180 137,329 14.96

Family Dollar 1626 18th AVE S ST Petersburg FL 33712 9,900 150,000 15.15

Family Dollar 12840 SW SR 45 Gainvesville FL 32618 8,000 105,435 13.18

44,500 667,582 15.00

Family Dollar Annual Report FY 2011

$ %

Sales 8,547,835,000

COGS 5,515,540,000

Gross Margin 3,032,295,000 35.5%

SG&A 2,394,223,000

Net Income 638,072,000 7.5%

AVG Sales per Store 1,259,814

Estimate for subject 1,511,776

Rent @ 122,000 8.1%

FDO Gross Margin Analysis / Rent Range

Please note that this analysis is based on a broad range ….

retail rents (occupancy costs) are typically in the range of 5% to 8% of sales

subject to the gross margin of the retail line of trade.

8% is not a “rule of thumb” that can be applied to other situations. It is

important to extract your own “rules of thumb” based on other locations and

your experience with retail companies

Task 8: Site in Search of User (Target Marketing)

• Identify potential 2nd tenant for 5,000 SF at site • Refer back to STDB Retail MarketPlace Profile report

– What NAICS would fit a 5,000 SF user and be compatible with dollar store?

– 4413 Auto parts (new AZO on SR 50 w of CR 419) – 442 Furniture (would need larger store) – 4431 Electronics (would need larger store) – 4441 BLDG Materials (hardware / paint)

• Ace Hardware or Sherwin Williams

– 445 Food (would need larger store & conflict) – 446 Health (grocery anchor) – 448 Clothing (grocery anchor) – 451 Sporting Good, Books (larger & grocery anchor)




























• Identify potential 2nd tenant for 5,000 SF at site • Refer back to STDB Retail MarketPlace Profile report

– What NAICS would fit a 5,000 SF user and be compatible with dollar store?

– 4413 Auto parts (new AZO on SR 50 w of CR 419) – 442 Furniture (would need larger store) – 4431 Electronics (would need larger store) – 4441 BLDG Materials (hardware / paint)

• Ace Hardware or Sherwin Williams

– 445 Food (would need larger store & conflict) – 446 Health (grocery anchor) – 448 Clothing (grocery anchor) – 451 Sporting Good, Books (larger & grocery anchor)


• Research paint & hardware (NAICS 4441)

• Go to web site for Sherwin-Williams and Ace Hardware and determine suitability for subject site.

– Sherwin Williams

• www.sherwin-williams.com

– Ace Hardware

• www.acehardware.com

http://www.sherwin-williams.com/



http://www.acehardware.com/

Sherwin Williams www.sherwin-williams.com




Ace Hardware www.acehardware.com

http://www.acehardware.com/

Task 9/10: Financial Analysis

• Development budget and project Pro-forma – Development budget

– Front Door • Developer cap rate spread

• Rent from the retailer’s perspective – Allow developer reasonable return on cost

• Typically 150 to 200 basis points over market cap rate

– Rent based on percentage of sales (varies based on operating gross margin within retail line of trade)

– Comparable rent at other sites with similar locational characteristics

• Back Door (adjustment for tenant’s rent feed-back) – Back Door / Residual Land Value

• Developer Gross Margin / Permanent Financing

Task 10: Financial Analysis

• Development budget and project Pro-forma – Development budget

• Financing – 3 approaches to construction financing

– Permanent financing

• Front Door / Back Door • Developer cap rate spread

– Front Door – rent quote

– Back Door (adjustment for tenant’s rent feed-back) • Back Door / Residual Land Value

• Developer Gross Margin / Permanent Financing

17438 E Colonial - Orlando, FL

STDB Example

• 4717 S FLORIDA AVE, Lakeland, FL, 33813 • Saunders Maps

• STDB activity • http://www.stdb.com/

• Create study areas • 1, 2, 3 mile radius

• 3, 5, 10 min drive time

• Runs reports • demographic

• Retail marketplace profie

http://www.stdb.com/

http://www.stdb.com/

Web Resources

• Census Quick Facts

– http://quickfacts.census.gov/qfd/index.html

• Economy at a Glance

– http://www.bls.gov/eag/eag.us.htm

• Location Quotient

– http://www.bls.gov/cew/cewlq.htm

http://quickfacts.census.gov/qfd/index.html

http://quickfacts.census.gov/qfd/index.html

http://www.bls.gov/eag/eag.us.htm

http://www.bls.gov/eag/eag.us.htm

http://www.bls.gov/cew/cewlq.htm

http://www.bls.gov/cew/cewlq.htm

New Retail Real Estate Valuation Perspective

• Traditional valuation approach – Comparable sales

– Replacement cost

– Income

• Current practice provides for income approach to be based on current rent and consideration of comparable rent

• New approach – “bottom up” based on tenant’s perspective, i.e., Tenant Financial Feasibility for subject location

• Tenant’s financially feasible rent (“TFF rent”) at subject location based on potential sales (demand)

• TFF rent becomes alternative input to income valuation approach








ESRI Report

• Allocate disposable household income by NAICS code (ESRI program/report – modification/expansion of Retail MarketPlace Profile)

– NAICS code for retail (44-45 & 722)

• Adjust current Retail MarketPlace Profile report to include new NAICS list for retail

– NAICS code for certain non-retail neighborhood services (see new NAICS list)

• Perhaps the calculation is allocation of disposable income based on expenditure characteristics under ESRI Tapestry Segmentation of 65 unique market segments

Documents

Retail Sales Model Valuation