For your business lease, find commercial real estate in vibrant trade areas near appropriate neighborhoods.
Evaluating a potential site for your restaurant, retail or other convenience-oriented business begins with understanding the quantity and quality of the residential customers who surround the location of the commercial property.
It will be unusual for you to choose a commercial real estate lease anywhere, including Tucson, that has poor support from residents in the trade area even if other customer sources are excellent.
The strongest customer source for restaurant and retail business is residents living in the surrounding neighborhoods. Their impact can be between 20% and 80% of your business. Between 40% and 60% of these kind of businesses depends on customers who live in the surrounding neighborhoods.
Trade Zone and Convenience Zone
The retail trade zone of a potential site can be as small as a single strip center or cluster of businesses or as large as several square miles with several malls and a large collection of shops and restaurants.
The retail trade zone represents the area a customer would visit to find your business. It is usually the draw of this retail area that attracts your non-destination customers to shop and dine in the area around your site.
The first demographic zone to consider is the area within one or two miles of a potential lease site. This is the boundary defined as the convenience zone. Because of its proximity, this area is very easy and practical for consumers to get to in order to use your business.
This one- to two-mile boundary is somewhat arbitrary. It might be smaller in a densely populated area such as central Tucson and greater in a small town setting such as Oro Valley.
The convenience zone tends to be smaller for a convenience-oriented business and larger for a destination-oriented business.
Convenience Zone Population
A larger population in the convenience zone is generally better for convenience-oriented businesses.
Convenience-driven sources of customers, including shopping, entertainment and hotels, are beneficial when concentrated in the convenience zone. But it is possible to have too much activity. You can lose the balance between residential customers and business/shopping support.
A smaller population in the convenience zone is less important for destination-oriented business because sales depends more on people traveling from outside the convenience zone.
For some destination-oriented businesses, people often will resist entering a congested area. Large residential numbers also can hurt your business when accompanied by a low amount of retail activity.
Convenience Zone Demographics
Regardless of the typical demographic features of your customers within the convenience zone, a much broader selection of demographic profiles will be attracted to your business simply because you are there.
Apartments and condominiums are generally a benefit in the convenience zone as these provide high-density populations often driven by the need for outside services and convenience. These dwellers tend to be younger or older than traditional neighborhood profiles.
In the convenience zone, do not expect to find typical demographics. Look for a broad collection of consumers possessing disposable income and easy access to your business.
Nearly all consumers in the convenience zone who use your products will be your customers.
It is ideal to have a few pockets of frequent customers within the convenience zone. Distance and convenience do matter to frequent customers. An additional 100 to 200 customers can significantly impact sales.
Neighborhoods and Image
Neighborhood descriptions include
- affluent and established
- middle-class homes and condominiums
- apartments and retail
- factories and low-income housing.
They also range from
- old to new
- developing to established
- static to dynamic
- ethnically diverse to mono-ethnic
- safe to crime-ridden.
Neighborhood creates a context for your site and can enhance, decrease or having no affect on your business’s image.
The type of neighborhood you locate in must pass a common-sense test as to whether your business fits its character. Demographics tell part of the story, but so does a quick evaluation of whether the physical character of the neighborhood will hurt, help or have no impact on your business. Look for obvious red flags; otherwise, expect at least a reasonable fit between your business and the surrounding neighborhood.
Quality of Surroundings
High-quality retail or residential surroundings usually are a positive draw for most types of businesses, independent of other factors. Some factors that influence perceptions of quality include
- contemporary design
- expensive materials
- landscape architecture
- unique functionality
- parks or other natural features.
Low-quality environments usually have reduced draw unless you possess a captive audience. Factors that detract from quality include
- low-income housing
- traditional factories
- litter-strewn streets and properties
- the absence of landscaping
- the perception of crime
- vacant land.
Low-income households and the absence of vehicles often create populations that have to support certain kinds of neighborhood businesses. Some of the highest-volume quick-serve restaurants and convenience stores exist in these surroundings.
Commercial Real Estate Group of Tucson can identify optimal zones and surroundings for your business. Contact the tenant representation company to learn more.
Commercial Real Estate Group of Tucson specializes in representing tenants and corporate users across the United States, Latin America, Europe and Asia as a member of ITRA. For more information call 520-299-3400.