Location, Location, Location: Finding The Perfect Commercial Location



Location, location, location is the mantra of retail sales. If you are thinking about investing in commercial retail property, how much do you know about finding the ideal location? If you don’t know enough, come along with me as we take a short commercial real estate training primer about location.

Traffic Matters

Let’s begin with the fact that storefronts with the best traffic command the highest rents. Likely, you already know it’s important to check out the neighborhood and understand the demographics before investing in a particular property. When it comes to retail traffic, you need to take this a step further by checking out traffic density and patterns at different times of the day and different days of the week.

An ideal situation would be on a heavy commuter road into a city business district. You could own one of two stores on opposite sides of the street. One is already established as a coffee house that allows easy right turns for the inbound morning commuter traffic. The other on the opposite side of the street would be a grocery or convenience store with right hand access for outbound commuters in the afternoon.

Take it a step further. Consider the traffic volume. If traffic is heavy, you want the store positioned so that customers cannot only get into the parking lot easily but also can get back onto the road easily. In the commuter example, this might mean not being at a corner location with a stop light halting traffic right in front of the store. The traffic will back up making it difficult for customers to get back in the flow. However, being on the other side of the stop light means when the light turns red, customers will easily be able to get back on the road.

Downtown Atlanta

Parking Matters

Also take parking into consideration. A general rule of thumb is retail stores need 5 to 8 parking spaces for every 1,000 square feet inside the store. But that is very general. If you’ve optimized the other traffic characteristics, you should be planning for higher than average traffic. You may need 10 or 12 parking spots for every 1,000 square feet of store space.

Other location considerations:

  • Is it a 7 days a week shopping district or a business district where traffic disappears after work hours and only generates traffic 5 days a week?
  • If you know what type of business it will be, is there competition nearby. In retail, competition can be a good thing. Especially if the competitor is well established and draws customers to the area. Also if the competitor does advertising that brings customers in.
  • Are there complimentary businesses nearby? A hair salon and women’s clothing store next to each other bring in similar minded women as customers.
  • If the locals mostly use public transportation, are you near a bus stop or will they need to walk 6 blocks from the nearest transportation.

Finally, look at it all from a customer’s viewpoint. I mean really do it. If you’re looking at property on a heavy commuter route, get into the commute to scout out the best locations. Both in the morning and afternoon commutes. Pull into the parking lot of any store you’re thinking about owning to learn how easy or difficult it is to park, go into the store, come back out, and get back into traffic.

Then come back at 7 or 8 in the evening. Are there any paying customers around or does it become a crime haven? Do the same thing on the weekends. Is there traffic or does it turn into a ghost town? Only when you really understand the traffic patterns can you make an educated decision if the property will demand high rent or not.

PhotoAuthor bio: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years. He also draws upon 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.