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 Gary@SRDcommercial.com Jeff Engelstad, Ph.D., CCIM University of Denver/Burns School of Real Estate & Construction Management 303-871-4741 / 303-898-6546 (Mobile) jengelst@du.edu Simon Thompson Director, Commercial Solutions ESRI 909-793-2853 / 909-653-5376 (Mobile) sthompson@esri.com Michael F. Amundson, MAI, CCIM, FRICS Managing Director Integra Realty Resources-Minneapolis/St. Paul 952-905-2401 / 612-741-6044 (Mobile) mamundson@irr.com George Ward, MAI, MRICS Integra Realty Resources, Inc. 212-255-7858 / gward@irr.com
Integra Realty Presentation 10/2/2012 Market Analysis for Retail Properties 9AM 12:30PM 1:30PM 5PM @ Palms Ballroom 1
Gary Ralston
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 nations 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 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.
Integra Training Session Outline

Retail business overview Retail geographies Retail gap analysis Retail real estate definitions Tenants financially feasible rent Case study user in search of site Other Web resources
CCIM Real Estate Feasibility Model

Market
(Demand/Supply)
Analysis
Strategic Analysis
Financial Analysis
Goals and Objectives Alternatives Decision Criteria Go/No Go Decision Points
Location, Site & Building Analysis
Political & Legal Analysis
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

Rank 1 2 3 Company Wal-Mart WMT (less Sam's) Kroger Target Cincinnati Minneapolis Headquarters Bentonville, Ark.
www.stores.org
# Stores 2011 4,423 3,868 3,574 1,763 Sales/Stores 71,463,486 68,300,414 23,920,257 38,834,940
Sales 316,083,000,000 264,186,000,000 85,491,000,000 68,466,000,000
4
5 6 7 8 9 10 11
Walgreen
Costco The Home Depot CVS Caremark Sam's Club (WMT) Lowe's Best Buy Safeway McDonald's
Deerfield, Ill.
Issaquah, Wash. Atlanta Woonsocket, R.I. Mooresville, N.C. Richfield, Minn. Pleasanton, Calif. Oak Brook, Ill.
66,330,000,000
69,400,000,000 62,075,000,000 59,688,000,000 53,795,000,000 49,282,000,000 37,551,000,000 36,923,000,000 34,172,000,000
7,651
433 1,963 7,345 611 1,712 1,443 1,453 14,087
8,669,455
160,277,136 31,622,517 8,126,344 88,044,190 28,786,215 26,022,869 25,411,562 2,425,783
12
13 14 15 16 17 18 19 20
Sears Holdings
SUPERVALU Publix Amazon.com Macy's Rite Aid Ahold USA / Royal Ahold Delhaize America Kohl's
Hoffman Estates, Ill.

Eden Prairie, Minn. Lakeland, Fla. Seattle Cincinnati Camp Hill, Pa. Washington, D.C. Salisbury, N.C. Menomonee Falls, Wis.
33,837,000,000
29,297,000,000 26,967,000,000 26,397,000,000 26,344,000,000 25,256,000,000 25,074,000,000 19,230,000,000 18,804,000,000
3,489
2,466 1,198 840 4,664 756 1,650 1,127 245 2,212 1,105
9,698,194
11,880,373 22,510,017 31,361,905 5,415,094 33,166,667 11,654,545 16,685,004 43,300,000 7,859,855 15,516,742
21
22 23
Apple Stores / iTunes

Apple Stores TJX J.C. Penney
Cupertino, Calif.
Framingham, Mass. Plano, Texas
17,825,000,000
10,608,500,000 17,386,000,000 17,146,000,000
Rank 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Company True Value YUM! Brands H-E-B Meijer Dollar General Wakefern / ShopRite BJ's Wholesale Club Gap Subway Verizon Wireless Nordstrom 7-Eleven Staples Whole Foods Market Ace Hardware
Headquarters Chicago Louisville, Ky. San Antonio Grand Rapids, Mich. Goodlettsville, Tenn. Keasbey, N.J. Westborough, Mass. San Francisco, Calif. Milford, Conn. Basking Ridge, N.J. Seattle Dallas Framingham, Mass. Austin, Texas Oak Brook, Ill.
Sales 17,135,000,000 17,100,000,000 16,820,000,000 16,603,000,000 14,807,000,000 12,838,000,000 11,797,000,000 11,443,000,000 11,206,000,000 10,997,000,000 10,497,000,000 10,361,000,000 10,337,000,000 9,794,000,000 9,491,000,000
# Stores 2011 4,650 18,050 308 197 9,937 291 196 2,436 25,014 2,330 225 7,779 1,583 311 4,072
Sales/Stores 3,684,946 947,368 54,610,390 84,279,188 1,490,088 44,116,838 60,188,776 4,697,455 447,989 4,719,742
39 40 41 42 43 44 45 46 47 48 49
Bed Bath & Beyond Aldi Wendy's Ross Stores Limited Brands Family Dollar Burger King Holdings Toys "R" Us Army Air Force Exchange Menard Starbucks
Union, N.J. Batavia, Ill. Dublin, Ohio Pleasanton, Calif. Columbus, Ohio Matthews, N.C. Miami Wayne, N.J. Dallas Eau Claire, Wis. Seattle
9,402,000,000 9,218,000,000 8,931,000,000 8,605,000,000 8,590,000,000 8,548,000,000 8,446,000,000 8,281,000,000 8,228,000,000 8,067,000,000
10,639,900,000
1,143 1,195 5,876 1,124 2,623 7,023 7,218 871 181 262
10,787
46,653,333 1,331,919 6,530,006 31,491,961 2,330,796 8,225,722 7,713,808 1,519,912 7,655,694 3,274,876 1,217,144 1,170,130 9,507,463 45,458,564 30,790,076 986,363
Rank 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
Company Darden Restaurants Trader Joe's Office Depot Barnes & Noble Hy-Vee Winn-Dixie Stores Health Mart Systems A&P Giant Eagle GameStop Dollar Tree AutoZone AT&T Wireless Dunkin' Brands DineEquity Wegman's Food Markets Dillard's Advance Auto Parts O'Reilly Automotive OfficeMax QVC Dick's Sporting Goods PetSmart Big Lots Defense Commissary Agcy. Save Mart
Headquarters Orlando Monrovia, Calif. Boca Raton, Fla. New York W. Des Moines, Iowa Jacksonville, Fla. Omaha, Neb. Montvale, N.J. O'Hara Township, Pa. Grapevine, Texas Chesapeake, Va. Memphis Dallas Canton, Mass. Glendale, Calif. Rochester, N.Y. Little Rock, Ark. Roanoke, Va. Springfield, Mo. Naperville, Ill. West Chester, Pa. Coraopolis, Pa. Phoenix, Ariz. Columbus, Ohio Fort Lee, Va. Modesto, Calif.
Sales 7,905,000,000 7,307,000,000 7,297,000,000 7,157,000,000 7,092,000,000 6,986,000,000 6,943,000,000 6,791,000,000 6,681,000,000 6,566,000,000 6,531,000,000 6,523,000,000 6,486,000,000 6,428,000,000 6,322,000,000 6,199,000,000 6,194,000,000 6,119,000,000 5,789,000,000 5,529,000,000 5,412,000,000 5,212,000,000 5,186,000,000 5,093,000,000 5,067,000,000 5,036,000,000
# Stores 2011 1,936 376 1,125 1,330 261 484 2,850 310 406 4,455 4,252 4,507 2,300 9,472 3,385 78 304 3,636 3,740 881 561 1,159 1,451 180 238
Sales/Stores 4,083,161 19,433,511 6,486,222 5,381,203 27,172,414 14,433,884 2,436,140 21,906,452 16,455,665 1,473,850 1,535,983 1,447,304 2,820,000 678,632 1,867,651 79,474,359 20,375,000 1,682,893 1,547,861 6,275,823 9,290,553 4,474,547 3,509,993 28,150,000 21,159,664
Rank 76
77 78 79 80 81 82 83 84 85 86 87 88 89 90 91
Company Alimentation Couche-Tard

Dell WinCo Foods Sherwin-Williams Harris Teeter Supermkts. Tractor Supply Co. Albertsons Chick-fil-A Brinker International Neiman Marcus Foot Locker RadioShack Burlington Coat Factory Roundy's Supermarkets Michaels Stores Belk
Headquarters Tempe, Ariz.

Round Rock, Texas Boise, Idaho Cleveland Charlotte, N.C. Brentwood, Tenn. Boise, Idaho Atlanta Dallas Dallas New York Fort Worth, Texas Burlington, N.J. Milwaukee, Wis. Irving, Texas Charlotte, N.C.
Sales 4,867,000,000
4,748,000,000 4,563,000,000 4,529,000,000 4,286,000,000 4,233,000,000 4,100,000,000 4,051,000,000 4,038,000,000 4,035,000,000 3,959,000,000 3,959,000,000 3,837,000,000 3,827,000,000 3,825,000,000 3,700,000,000
# Stores 2011 4,050

80 3,326 204 1,085 211 1,615 1,335 77 2,476 5,480 477 158 1,109 303
Sales/Stores 1,201,728
57,037,500 1,361,696 21,009,804 3,901,382 19,431,280 2,508,359 3,024,719 52,402,597 1,598,950 722,445 8,044,025 24,221,519 3,449,053 12,211,221
92
93 94 95 96
Stater Bros. Holdings

Sonic Williams-Sonoma IKEA North America Price Chopper Supermkts.
San Bernardino, Calif.

Oklahoma City, Okla. San Francisco Conshohocken, Pa. Rotterdam, N.Y.
3,693,000,000
3,693,000,000 3,682,000,000 3,632,000,000 3,556,000,000
167
3,561 561 38 129
22,113,772
1,037,068 6,563,280 95,578,947 27,565,891
97
98 99 100
The Sports Authority

OSI Restaurant Partners Ingles Markets Raley's
Englewood, Colo.
Tampa, Fla. Asheville, N.C. W. Sacramento, Calif.
3,471,000,000
3,461,000,000 3,429,000,000 3,335,000,000
460
1248 203 142
7,545,652
2,773,237 16,891,626 23,485,915
http://www.stores.org/2012/Top-100-Retailers
Retail Business Life Cycle
DECLINE
MATURITY
EXPANSION
INNOVATION
SALES IN $ OR VOLUME
TIME
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.
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
Year 2007 2008 2009 2010 2011 2012
Jan 363,340 376,031 338,246 348,585 375,739 400,550
Feb 364,458 372,110 337,081 348,794 378,934 404,692
Mar 367,902 372,846 331,380 355,695 382,115 406,200
Apr 366,466 374,810 332,258 358,023 383,810 404,112
May 371,045 376,189 335,557 355,693 383,733 403,641
Jun 367,773 377,289 339,659 354,404 387,045 400,635
Jul 369,539 375,214 340,600 355,436 388,064 403,176
Aug 371,085 373,741 348,621 358,715 388,595 NA
Sep 374,620 366,877 339,523 361,756 392,354 NA
Oct 374,485 353,187 342,223 366,507 395,995 NA
Nov 378,939 342,298 346,812 370,165 397,868 NA
Dec 376,660 333,348 348,184 372,587 398,012 NA
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 Factors1992 to present
Example with ex-auto --- discuss difference
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
http://www.census.gov/cgi-bin/sssd/naics/naicsrch?chart_code=72&search=2012 NAICS Search
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_44.HTM
2007 Economic Census
Total Retail Sales 2011

44-45 & 722 Retail and food services sales, total Retail sales and food services excl motor vehicle and parts Retail sales, total Retail sales, total (excl. motor vehicle and parts dealers) 441 442 443 444 445 446 447 448 451 452 453 454 722 Motor vehicle and parts dealers Furniture and home furnishings stores Electronics and appliance stores Building mat. and garden equip. and supplies dealers Food and beverage stores Health and personal care stores Gasoline stations Clothing and clothing access. stores Sporting goods, hobby, book, and music stores General merchandise stores Miscellaneous store retailers Nonstore retailers Food services and drinking places 4,647,648 3,821,349 4,154,147 3,327,848 826,299 88,821 99,996 278,902 613,908 272,286 526,196 226,748 84,671 629,123 113,452 393,745 493,501
http://www.census.gov/retail/index.html
Retail Business Trends

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 Citys business?
The internet??
Retail Trade Sales--Total and E-Commerce

NAICS code 2009 Value of sales (million dollars) Total
E-commerce as % E-commerce of total sales
Retail trade, total

Motor vehicle and parts dealers Furniture and home furnishings stores Electronics and appliance stores Building material/garden equipment/supplies stores Food and beverage stores Health and personal care stores Gasoline station Clothing and clothing accessories stores Sporting goods, hobby, book, and music stores
44-45
441 442 443 444 445 446 447 448 451
3,638,471
676,801 86,657 98,384 268,206 570,581 253,243 388,515 204,866 81,373
145,214
17,201 1,140 477 883 177 2,965 1,865
4.0
2.5 1.2 0.2 0.2 0.1 1.4 2.3 2.2 37.3 48.1
General merchandise stores

Miscellaneous store retailers Nonstore retailers ..Electronic shopping and mail-order houses
452
453 454 45411
592,009
105,366 312,470 234,667
220
2,360 116,543 112,791
Source: U.S. Census Bureau, "E-Stats, 2009 E-commerce Multi-sector Report," May 2011.

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 (millions of dollars) Quarter Total 2nd quarter 2012(p) 1st quarter 2012(r) 4th quarter 2011 3rd quarter 2011 2nd quarter 2011(r) 1st quarter 2011 4th quarter 2010 3rd quarter 2010 2nd quarter 2010 1st quarter 2010 1,076,934 1,081,347 1,065,030 1,044,075 1,032,271 1,016,544 990,726 958,694 952,070 938,772 E-commerce 54,842 53,091 51,575 48,564 47,575 46,065 44,819 43,043 41,112 39,295 E-commerce as a Percent of Total 5.1 4.9 4.8 4.7 4.6 4.5 4.5 4.5 4.3 4.2 Total -0.4 1.5 2.0 1.1 1.5 2.6 3.3 0.7 1.4 1.6 E-commerce 3.3 2.9 6.2 2.1 3.3 2.8 4.1 4.7 4.6 3.0 Percent Change From Prior Quarter Percent Change From Same Quarter A Year Ago Total 4.3 6.4 7.5 8.9 8.4 8.3 7.2 4.6 6.4 5.1 E-commerce 15.3 15.3 15.1 12.8 15.7 17.2 17.4 16.1 16.9 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 (millions of dollars) Quarter Total 2nd quarter 2012(p) 1st quarter 2012(r) 4th quarter 2011 3rd quarter 2011 2nd quarter 2011(r) 1st quarter 2011 4th quarter 2010 3rd quarter 2010 2nd quarter 2010 1st quarter 2010 1,076,934 1,081,347 1,065,030 1,044,075 1,032,271 1,016,544 990,726 958,694 952,070 938,772 E-commerce 54,842 53,091 51,575 48,564 47,575 46,065 44,819 43,043 41,112 39,295 E-commerce as a Percent of Total 5.1 4.9 4.8 4.7 4.6 4.5 4.5 4.5 4.3 4.2 Total -0.4 1.5 2.0 1.1 1.5 2.6 3.3 0.7 1.4 1.6 E-commerce 3.3 2.9 6.2 2.1 3.3 2.8 4.1 4.7 4.6 3.0 Percent Change From Prior Quarter Percent Change From Same Quarter A Year Ago Total 4.3 6.4 7.5 8.9 8.4 8.3 7.2 4.6 6.4 5.1 E-commerce 15.3 15.3 15.1 12.8 15.7 17.2 17.4 16.1 16.9 14.9
Amazon.com
Amazon 2011 10K
Amazon.com
Amazon 2011 10K
Retail Real Estate Trends

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

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
COGS Gross Margin Gross Margin %
87,048,000,000
77,739,000,000 9,309,000,000 10.7%
90,374,000,000
71,494,000,000 18,880,000,000 20.9%
48,077,000,000
37,288,000,000 10,789,000,000 22.4%
418,952,000,000
315,287,000,000 103,665,000,000 24.7%
41,567,000,000
30,836,000,000 10,731,000,000 25.8%
Publix Sales COGS Gross Margin Gross Margin % 26,967,389,000 19,520,370,000 7,447,019,000 27.6%
WAG 72,184,000,000 51,692,000,000 20,492,000,000 28.4%
TGT 65,786,000,000 45,725,000,000 20,061,000,000 30.5%
DG 14,807,188,000 10,109,278,000 4,697,910,000 31.7%
HD 67,997,000,000 44,693,000,000 23,304,000,000 34.3%
Advance Auto Parts Example

Search Advance Auto Parts Investor Relations Annual Report / 10K Look for income statement
Sears Holding Corporation
Coffee can pay a lot of rent!

Starbucks (NASDAQ:SBUX) FY ending 12/2/2011 Net Sales Cost of sales including occupancy costs Gross Margin 9,632,400,000 4,949,300,000 4,683,100,000 51.4% 48.6% %
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
Summary Demographics 2009 Population 2009 Households 2009 Median Disposable Income 2009 Per Capita Income 309,731,508
116,523,156
$43,361 $27,277
Industry Summary Total Retail Trade and Food & Drink (NAICS 44-45, 722) Total Retail Trade (NAICS 44-45) Total Food & Drink (NAICS 722)
Demand (Retail Potential)
Supply
Retail Gap Surplus / Leakage Factor -0.7 -0.9 0.8 -$44,222,173,726 -$51,276,509,800 $7,054,336,074
Number of Businesses 2,549,724 1,864,278 685,446
(Retail Sales) (Demand - Supply)
$3,159,959,994,136 $3,204,182,167,862 $2,696,791,458,246 $2,748,067,968,046 $463,168,535,890 $456,114,199,816
Industry Group Motor Vehicle & Parts Dealers (NAICS 441) Automobile Dealers (NAICS 4411) Other Motor Vehicle Dealers (NAICS 4412) Auto Parts, Accessories, and Tire Stores (NAICS 4413) Furniture & Home Furnishings Stores (NAICS 442) Furniture Stores (NAICS 4421) Home Furnishings Stores (NAICS 4422) Electronics & Appliance Stores (NAICS 443/NAICS 4431) Bldg Materials, Garden Equip. & Supply Stores (NAICS 444) Building Material and Supplies Dealers (NAICS 4441) Lawn and Garden Equipment and Supplies Stores (NAICS 4442) Food & Beverage Stores (NAICS 445) Grocery Stores (NAICS 4451) Specialty Food Stores (NAICS 4452) Beer, Wine, and Liquor Stores (NAICS 4453)
Demand (Retail Potential) $670,514,909,767 $578,877,558,045 $50,330,131,040 $41,307,220,682 $98,919,930,686 $62,542,941,027 $36,376,989,659 $82,417,769,734 $116,439,012,859 $106,549,571,943 $9,889,440,916
Supply (Retail Sales) $687,977,716,392 $593,335,669,404 $52,094,544,181 $42,547,502,807 $91,847,106,437 $54,742,430,323 $37,104,676,114 $84,493,504,711 $116,952,731,058 $106,658,508,886 $10,294,222,172
Retail Gap -$17,462,806,625 -$14,458,111,359 -$1,764,413,141 -$1,240,282,125 $7,072,824,249 $7,800,510,704 -$727,686,455 -$2,075,734,977 -$513,718,199 -$108,936,943 -$404,781,256
Surplus / Leakage Factor -1.3 -1.2 -1.7 -1.5 3.7 6.7 -1.0 -1.2 -0.2 -0.1 -2.0
Number of Businesses 235,175 111,692 42,451 81,032 110,176 47,868 62,308 123,325 166,028 129,317 36,711
$512,484,559,459 $469,368,667,754 $18,839,987,869 $24,275,903,836
$518,878,839,136 $476,447,171,320 $16,811,716,877 $25,619,950,939
-$6,394,279,677 -$7,078,503,566 $2,028,270,992 -$1,344,047,103
-0.6 -0.7 5.7 -2.7
218,892 129,623 51,200 38,069
Demand Industry Group Health & Personal Care Stores (NAICS 446/NAICS 4461) Gasoline Stations (NAICS 447/NAICS 4471) Clothing and Clothing Accessories Stores (NAICS 448) Clothing Stores (NAICS 4481) Shoe Stores (NAICS 4482) Jewelry, Luggage, and Leather Goods Stores (NAICS 4483) Sporting Goods, Hobby, Book, and Music Stores (NAICS 451) Sporting Goods/Hobby/Musical Instrument Stores (NAICS 4511) Book, Periodical, and Music Stores (NAICS 4512) (Retail Potential) $104,417,752,601 $432,703,600,864 $120,364,069,285 $93,448,677,340 $11,788,977,284 $15,126,414,661 $38,531,396,409 $20,217,691,471 $18,313,704,938
Supply (Retail Sales) $113,430,264,401 $424,337,402,649 $128,104,648,006 $99,070,632,972 $12,755,794,092 $16,278,220,942 $42,190,971,217 $22,438,790,537 $19,752,180,680 Retail Gap -$9,012,511,800 $8,366,198,215 -$7,740,578,721 -$5,621,955,632 -$966,816,808 -$1,151,806,281 -$3,659,574,808 -$2,221,099,066 -$1,438,475,742
Surplus / Leakage Factor -4.1 1.0 -3.1 -2.9 -3.9 -3.7 -4.5 -5.2 -3.8
Number of Businesses 129,338 105,225 236,065 156,523 30,754 48,788 131,312 102,310 29,002
General Merchandise Stores (NAICS 452) Department Stores Excluding Leased Depts. (NAICS 4521) Other General Merchandise Stores (NAICS 4529) Miscellaneous Store Retailers (NAICS 453) Florists (NAICS 4531)
$370,767,412,695 $180,743,211,742 $190,024,200,953 $55,167,277,457 $6,289,266,686
$385,040,000,063 $182,664,226,029 $202,375,774,034 $57,875,769,094 $5,478,872,712
-$14,272,587,368 -$1,921,014,287 -$12,351,573,081 -$2,708,491,637 $810,393,974
-1.9 -0.5 -3.1 -2.4 6.9
76,412 30,293 46,119 303,678 41,534
Office Supplies, Stationery, and Gift Stores (NAICS 4532)

Used Merchandise Stores (NAICS 4533) Other Miscellaneous Store Retailers (NAICS 4539) Nonstore Retailers (NAICS 454) Electronic Shopping and Mail-Order Houses (NAICS 4541) Vending Machine Operators (NAICS 4542) Direct Selling Establishments (NAICS 4543) Food Services & Drinking Places (NAICS 722) Full-Service Restaurants (NAICS 7221) Limited-Service Eating Places (NAICS 7222) Special Food Services (NAICS 7223) Drinking Places - Alcoholic Beverages (NAICS 7224)
$18,313,701,964
$4,331,171,072 $26,233,137,735 $94,063,766,430 $49,213,479,731 $14,368,545,500 $30,481,741,199 $463,168,535,890 $196,120,539,286 $203,344,507,091 $38,017,365,935 $25,686,123,578
$19,267,443,167
$4,863,757,757 $28,265,695,458 $96,939,014,882 $54,134,827,567 $10,946,777,588 $31,857,409,727 $456,114,199,816 $200,757,467,451 $191,605,481,221 $38,012,352,773 $25,738,898,371
-$953,741,203
-$532,586,685 -$2,032,557,723 -$2,875,248,452 -$4,921,347,836 $3,421,767,912 -$1,375,668,528 $7,054,336,074 -$4,636,928,165 $11,739,025,870 $5,013,162 -$52,774,793
-2.5
-5.8 -3.7 -1.5 -4.8 13.5 -2.2 0.8 -1.2 3.0 0.0 -0.1
83,592
59,822 118,730 28,652 5,329 8,277 15,046 685,446 384,498 210,456 34,658 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
distance to next occurrence of competing supply
Cannibalization Consistent with Reillys 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 distance to competing supply in each direction Adjust to account for road systems
Ralstons Rules for retail trade areas

1) Radius 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
Gap Analysis
1. Select Benchmark Geography
a. Typically MSA or County
2. Calculate Demand parameter
Model for Demand Parameter
Total retail square feet in benchmark geography
Total population or number of households in benchmark geography Retail square feet per capita or per household in benchmark geography
Gap Analysis
3. Estimate the demand for aggregate retail space in the market area
Model for Demand
Demand parameter
Market area population or number of households
Square feet of demand
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.
Gap Analysis
4. Calculate the gap including an acceptable vacancy for aggregate retail space in the market area
Model for Gap

Demand including
Supply
Gap including adjustment for acceptable vacancy
Gap using Benchmark Geography

Lake County, FL
Population Households Retail SF 305,150 126,929 6,046,685
Trade Area
Households Retail SF 11,800 410,000
What is the Gap?
Benchmark Geography Example

Retail SF in Lake HH in Lake SF/HH 6,046,685 126,929 47.64
Demand Parameter # of HH in Trade Area

Demand
47.64 11,800
562,132
Demand Supply in Trade Area Gap
562,132 410,000 152,132
Some say we have too much space

US Retail Space Per Capita
has increased but so have sales until 2007 50.0
49.0
48.0
47.0
46.0
45.0
44.0
43.0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Retail Activity
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
61 10/2/2012
Retail Space Definitions (ICSC / ULI)

Freestanding Shopping Centers
Open Air Center

Costar -> General
Costar -> Shopping
Convenience Neighborhood Community Power Center (a/k/a Super Community)

Lifestyle Theme / Festival
Strip Centers Neighborhood Community
Other
Costar -> Specialty

Theme / Festival Outlet
Enclosed
Regional / Superregional Outlet
Costar -> Mall
Mixed use
2008
Number of Shopping Centers1 Minimum Size Shopping Center Included 106,617 No Minimum Size
2009
107,514 No Minimum Size
2010
2011
Shopping Centers by Type (Number of Centers):1 Super-Regional (800,000+ sq ft)

Regional (400,000 - 800,000 sq ft) Community (100,000 - 350,000 sq ft) Neighborhood (30,000 - 150,000 sq ft) Power Center (250,000 - 600,000 sq ft) Lifestyle (150,000 - 500,000 sq ft) Theme/Festival (80,000 - 250,000 sq ft) Outlet (50,000 - 400,000 sq ft) Strip/Convenience (< 30,000 sq ft) Airport Retail (75,000 - 250,000 sq ft) Shopping Center GLA1 Shopping Centers by Type (Share of GLA):1 Super-Regional (800,000+ sq ft) Regional (400,000 - 800,000 sq ft) Community (100,000 - 350,000 sq ft) Neighborhood (30,000 - 150,000 sq ft) Power Center (250,000 - 600,000 sq ft) Lifestyle (150,000 - 500,000 sq ft) Theme/Festival (80,000 - 250,000 sq ft) Outlet (50,000 - 400,000 sq ft) Strip/Convenience (< 30,000 sq ft) Airport Retail (75,000 - 250,000 sq ft) Shopping Center GLA as % of Total Retail Space 10.7% 6.2% 24.9% 31.8% 11.3% 1.8% 0.5% 1.0% 11.6% 0.2% 45.9% 10.7% 6.2% 24.8% 31.7% 11.4% 1.8% 0.5% 1.0% 11.6% 0.2% 46.0% 10.7% 6.2% 24.8% 31.7% 11.4% 1.8% 0.5% 1.0% 11.6% 0.2% 45.9% 10.7% 6.2% 24.8% 31.7% 11.5% 1.8% 0.5% 1.0% 11.6% 0.2% 45.9%
639
779 9,211 31,582 2,027 391 247 319 61,355 67 7,234,299,203 sq ft
644
791 9,293 31,804 2,070 412 250 323 61,859 68 7,307,603,702 sq ft
646
791 9,317 31,875 2,079 417 250 325 62,004 69 7,325,729,312 sq ft
646
791 9,324 31,887 2,083 418 250 325 62,030 69 7,330,063,735 sq ft
Total Shopping Center GLA per 100 Inhabitants

Number of Retail Establishments2
2,376 sq ft
N/A
2,380 sq ft
N/A
2,372 sq ft
N/A
N/A
N/A
Source: www.costar.com
Sales
2008
2009
2010
2011
Total Retail Sales (in USD)2 Year-on-Year % Change in Retail Sales Total Retail Sales per Capita (in USD) Total Retail Sales % GDP2, 3 Shopping-Center Sales (in USD)2, 4, 5 Year-on-Year % Change in Shopping-Center Sales Shopping-Center Sales per Capita (in USD)
US$4.41 tril. -0.9% US$14,626 31.7% US$2.27 tril. 0.7% US$7,423
US$4.09 tril. -7.2% US$14,363 30.7% US$2.22 tril. -2.6% US$7,408
US$4.36 tril. 6.4% US$13,253 29.0% US$2.29 tril. 3.4% US$7,176
N/A N/A N/A N/A N/A N/A 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 Office Industrial Flex Retail Health Care Hospitality Square Footage 12,058,379,264 23,851,606,671 2,907,635,121 17,336,105,191 2,634,773,693 2,556,726,260 Price/SF $136 $45 $91 $172 $490 $97 Market Cap $1,639,939,579,842 $1,073,322,300,185 $264,594,796,011 $2,981,810,092,879 $1,291,039,109,668 $894,854,191,000
Mixed-Use
107,651,632
$95
$62
$10,226,905,040
$1,403,897,000,000 $ 1,953,008,671,667
Multi-Family 22,643,500,000 Specialty, Sports & Entertainment
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 2009 Households 2009 Median Disposable Income 2009 Per Capita Income 309,731,508
116,523,156
$43,361 $27,277
Industry Summary Total Retail Trade and Food & Drink (NAICS 44-45, 722) Total Retail Trade (NAICS 44-45) Total Food & Drink (NAICS 722)
Demand (Retail Potential)
Supply
Retail Gap Surplus / Leakage Factor -0.7 -0.9 0.8 -$44,222,173,726 -$51,276,509,800 $7,054,336,074
Number of Businesses 2,549,724 1,864,278 685,446
(Retail Sales) (Demand - Supply)
$3,159,959,994,136 $3,204,182,167,862 $2,696,791,458,246 $2,748,067,968,046 $463,168,535,890 $456,114,199,816
Industry Group Motor Vehicle & Parts Dealers (NAICS 441) Automobile Dealers (NAICS 4411) Other Motor Vehicle Dealers (NAICS 4412) Auto Parts, Accessories, and Tire Stores (NAICS 4413) Furniture & Home Furnishings Stores (NAICS 442) Furniture Stores (NAICS 4421) Home Furnishings Stores (NAICS 4422) Electronics & Appliance Stores (NAICS 443/NAICS 4431) Bldg Materials, Garden Equip. & Supply Stores (NAICS 444) Building Material and Supplies Dealers (NAICS 4441) Lawn and Garden Equipment and Supplies Stores (NAICS 4442) Food & Beverage Stores (NAICS 445) Grocery Stores (NAICS 4451) Specialty Food Stores (NAICS 4452) Beer, Wine, and Liquor Stores (NAICS 4453)
Demand (Retail Potential) $670,514,909,767 $578,877,558,045 $50,330,131,040 $41,307,220,682 $98,919,930,686 $62,542,941,027 $36,376,989,659 $82,417,769,734 $116,439,012,859 $106,549,571,943 $9,889,440,916
Supply (Retail Sales) $687,977,716,392 $593,335,669,404 $52,094,544,181 $42,547,502,807 $91,847,106,437 $54,742,430,323 $37,104,676,114 $84,493,504,711 $116,952,731,058 $106,658,508,886 $10,294,222,172
Retail Gap -$17,462,806,625 -$14,458,111,359 -$1,764,413,141 -$1,240,282,125 $7,072,824,249 $7,800,510,704 -$727,686,455 -$2,075,734,977 -$513,718,199 -$108,936,943 -$404,781,256
Surplus / Leakage Factor -1.3 -1.2 -1.7 -1.5 3.7 6.7 -1.0 -1.2 -0.2 -0.1 -2.0
Number of Businesses 235,175 111,692 42,451 81,032 110,176 47,868 62,308 123,325 166,028 129,317 36,711
$512,484,559,459 $469,368,667,754 $18,839,987,869 $24,275,903,836
$518,878,839,136 $476,447,171,320 $16,811,716,877 $25,619,950,939
-$6,394,279,677 -$7,078,503,566 $2,028,270,992 -$1,344,047,103
-0.6 -0.7 5.7 -2.7
218,892 129,623 51,200 38,069
Demand Industry Group Health & Personal Care Stores (NAICS 446/NAICS 4461) Gasoline Stations (NAICS 447/NAICS 4471) Clothing and Clothing Accessories Stores (NAICS 448) Clothing Stores (NAICS 4481) Shoe Stores (NAICS 4482) Jewelry, Luggage, and Leather Goods Stores (NAICS 4483) Sporting Goods, Hobby, Book, and Music Stores (NAICS 451) Sporting Goods/Hobby/Musical Instrument Stores (NAICS 4511) Book, Periodical, and Music Stores (NAICS 4512) (Retail Potential) $104,417,752,601 $432,703,600,864 $120,364,069,285 $93,448,677,340 $11,788,977,284 $15,126,414,661 $38,531,396,409 $20,217,691,471 $18,313,704,938
Supply (Retail Sales) $113,430,264,401 $424,337,402,649 $128,104,648,006 $99,070,632,972 $12,755,794,092 $16,278,220,942 $42,190,971,217 $22,438,790,537 $19,752,180,680 Retail Gap -$9,012,511,800 $8,366,198,215 -$7,740,578,721 -$5,621,955,632 -$966,816,808 -$1,151,806,281 -$3,659,574,808 -$2,221,099,066 -$1,438,475,742
Surplus / Leakage Factor -4.1 1.0 -3.1 -2.9 -3.9 -3.7 -4.5 -5.2 -3.8
Number of Businesses 129,338 105,225 236,065 156,523 30,754 48,788 131,312 102,310 29,002
General Merchandise Stores (NAICS 452) Department Stores Excluding Leased Depts. (NAICS 4521) Other General Merchandise Stores (NAICS 4529) Miscellaneous Store Retailers (NAICS 453) Florists (NAICS 4531)
$370,767,412,695 $180,743,211,742 $190,024,200,953 $55,167,277,457 $6,289,266,686
$385,040,000,063 $182,664,226,029 $202,375,774,034 $57,875,769,094 $5,478,872,712
-$14,272,587,368 -$1,921,014,287 -$12,351,573,081 -$2,708,491,637 $810,393,974
-1.9 -0.5 -3.1 -2.4 6.9
76,412 30,293 46,119 303,678 41,534
Office Supplies, Stationery, and Gift Stores (NAICS 4532)

Used Merchandise Stores (NAICS 4533) Other Miscellaneous Store Retailers (NAICS 4539) Nonstore Retailers (NAICS 454) Electronic Shopping and Mail-Order Houses (NAICS 4541) Vending Machine Operators (NAICS 4542) Direct Selling Establishments (NAICS 4543) Food Services & Drinking Places (NAICS 722) Full-Service Restaurants (NAICS 7221) Limited-Service Eating Places (NAICS 7222) Special Food Services (NAICS 7223) Drinking Places - Alcoholic Beverages (NAICS 7224)
$18,313,701,964
$4,331,171,072 $26,233,137,735 $94,063,766,430 $49,213,479,731 $14,368,545,500 $30,481,741,199 $463,168,535,890 $196,120,539,286 $203,344,507,091 $38,017,365,935 $25,686,123,578
$19,267,443,167
$4,863,757,757 $28,265,695,458 $96,939,014,882 $54,134,827,567 $10,946,777,588 $31,857,409,727 $456,114,199,816 $200,757,467,451 $191,605,481,221 $38,012,352,773 $25,738,898,371
-$953,741,203
-$532,586,685 -$2,032,557,723 -$2,875,248,452 -$4,921,347,836 $3,421,767,912 -$1,375,668,528 $7,054,336,074 -$4,636,928,165 $11,739,025,870 $5,013,162 -$52,774,793
-2.5
-5.8 -3.7 -1.5 -4.8 13.5 -2.2 0.8 -1.2 3.0 0.0 -0.1
83,592
59,822 118,730 28,652 5,329 8,277 15,046 685,446 384,498 210,456 34,658 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
Tenants 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)

http://www.census.gov/cgibin/sssd/naics/naicsrch?chart_code=44&search=2012 NAICS Search
Identification of retail-line-of-trade (4 digit NAICS)

4411 4412 4413 4421 4422 4431 4441 4442 4451 4452 4453 4461 4471 4481 4482 4483 4511 4512 4521 4529 4531 4532 4533 4539 4541 4542 4543 7223 7224 7225 Automobile Dealers Other Motor Vehicle Dealers Automotive Parts, Accessories, and Tire Stores Furniture Stores Home Furnishings Stores Electronics and Appliance Stores Building Material and Supplies Dealers Lawn and Garden Equipment and Supplies Stores Grocery Stores Specialty Food Stores Beer, Wine, and Liquor Stores Health and Personal Care Stores Gasoline Stations Clothing Stores Shoe Stores Jewelry, Luggage, and Leather Goods Stores Sporting Goods, Hobby, and Musical Instrument Stores Book Stores and News Dealers Department Stores Other General Merchandise Stores Florists Office Supplies, Stationery, and Gift Stores Used Merchandise Stores Other Miscellaneous Store Retailers Electronic Shopping and Mail-Order Houses Vending Machine Operators Direct Selling Establishments Special Food Services (Caterers, Mobile Food Services) Drinking Places (Alcoholic Beverages) Restaurants and Other Eating Places

Ralstons Rules for retail trade areas

1) Radius distance to next competing point of supply
2) Drive-time (3, 5 & 10 min) 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
Site Plan
Restaurants
Hotels
Subject Property
LEGOLAND FLORIDA Market Area Map
LEGOLAND Vicinity 2010 Traffic Counts (AADT)
26,000
http://www2.dot.state.fl.us/FloridaTrafficOnline/viewer.html
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.
Lake Shadow
Store Size/Distance to Store
2 2
Sum(Store Size/Distance to Store )
Capture (or probability of visiting store)
Conclusions
1. Calculate Sum(Store Size/Distance to Store) Store A 14,000 Square Feet / 1.02 Miles to Target Neighborhood = Store B 20,000 Square Feet / 1.02 Miles to Target Neighborhood = 2 Store C 100,000 Square Feet / 2.0 Miles to Target Neighborhood = 14,000 20,000 25,000 59,000
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.
2. Calculate Probability That Neighborhood Residents Will Visit Each Store

2 Probability of Visiting Store A = ( 14,000 Square Feet / 1.0 Miles to Target Neighborhood) / 59,000 = 0.2372 2 Probability of Visiting Store B = ( 20,000 Square Feet / 1.0 Miles to Target Neighborhood) / 59,000 = 0.3389 2 Probability of Visiting Store C = (100,000 Square Feet / 2.0 Miles to Target Neighborhood) / 59,000 = 0.4237
It is more likely that store "C" will be visited even though it is twice as far away because it is far bigger than the other two stores.
Lake Bell
Neighborhood "X" Block Group X
Store "C" 100,000 SqFt.
! (
Lake Fairview
2.0 Miles
1.0
ile
Lake Killarney
l es Mi
1. 0
! (
Store "B" 20,000 SqFt.
L Lake Fairview
Store "A" 14,000 SqFt.
( !


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 tenants perspective, i.e., Tenant Financial Feasibility for subject location Tenants 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.
Retail Case Study Objectives

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
CCIM Real Estate Feasibility Model

Market
(Demand/Supply)
Analysis
Strategic Analysis
Financial Analysis
Goals and Objectives Alternatives Decision Criteria Go/No Go Decision Points Political & Legal Analysis
Location, Site & Building Analysis
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-KissimmeeSanford, 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 2010 Summary Population Households Families Average Household Size Owner Occupied HUs Renter Occupied HUs Median Age Households by Income - 2010 < $15,000 $15,000 - $24,999 $25,000 - $34,999 $35,000 - $49,999 $50,000 - $74,999 $75,000 - $99,999 $100,000 - $149,999 $150,000 - $199,000 $200,000+ Median Household Income Average Household Income Per Capita Income Households by Income (percentage) - 2010 < $15,000 $15,000 - $24,999 $25,000 - $34,999 $35,000 - $49,999 $50,000 - $74,999 $75,000 - $99,999 $100,000 - $149,999 $150,000 - $199,000 $200,000+
www.stdb.com www.esri.com
Orlando MSA 2,130,826 798,378 535,736 2.63 526,108 272,270 36.9
FL 18,917,612 7,448,581 4,882,567 2.48 5,182,698 2,265,883 41.4
USA 311,212,863 116,761,140 78,333,359 2.59 76,868,769 39,892,371 37.0
1,118,349 412,610 265,541 2.65 247,617 164,993 34.4
40,392 38,021 43,836 67,582 93,129 63,089 43,664 10,780 12,117 $53,545 $67,530 $25,257
76,650 74,296 85,229 129,290 186,342 113,237 89,647 20,426 23,261 $53,598 $67,452 $25,527
914,255 770,097 881,105 1,164,947 1,615,564 974,111 728,238 177,590 222,640 $49,910 $64,516 $25,768
13,324,537 10,943,687 11,375,270 17,500,292 25,175,713 16,451,401 13,940,570 3,980,482 4,068,037 $54,442 $70,173 $26,739
9.79% 9.21% 10.62% 16.38% 22.57% 15.29% 10.58% 2.61% 2.94%
9.60% 9.31% 10.68% 16.19% 23.34% 14.18% 11.23% 2.56% 2.91%
12.27% 10.34% 11.83% 15.64% 21.69% 13.08% 9.78% 2.38% 2.99%
11.41% 9.37% 9.74% 14.99% 21.56% 14.09% 11.94% 3.41% 3.48%
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 Population Households Families Average Household Size Owner Occupied HUs Renter Occupied HUs Median Age Trends: 2008-2013 Annual Rate Population Households Families Owner HHs Median Household Income 2000 Number 5,121 5,357 6,283 8,686 10,487 5,537 3,392 661 423 $45,277 $53,803 $19,200 2000 Number 101,727 9,408 425 5,502 104 10,037 4,242 30,193
2000 131,442 45,861 30,962 2.76 30,663 15,198 29.5 Area 3.29% 3.26% 3.04% 3.14% 2.62% 2008 Number 4,805 5,106 5,318 9,879 15,506 11,915 10,041 2,426 1,583 $61,706 $73,471 $25,880 2008 Number 135,886 18,400 680 10,180 172 19,560 7,411 59,505
2008 192,289 66,579 45,065 2.81 47,359 19,220 31.4
2013 226,045 78,176 52,334 2.82 55,283 22,893 32.4 National 1.23% 1.26% 1.05% 1.07% 3.19% 2013 Number 5,008 4,281 4,756 7,896 19,240 13,155 15,681 4,794 3,365 $70,227 $86,413 $30,310 2013 Number 151,432 23,780 824 13,346 216 26,912 9,535 82,101
Households by Income < $15,000 $15,000 - $24,999 $25,000 - $34,999 $35,000 - $49,999 $50,000 - $74,999 $75,000 - $99,999 $100,000 - $149,999 $150,000 - $199,999 $200,000+ Median Household Income Average Household Income Per Capita Income
Percent 11.1% 11.7% 13.7% 18.9% 22.8% 12.1% 7.4% 1.4% 0.9%
Percent 7.2% 7.7% 8.0% 14.8% 23.3% 17.9% 15.1% 3.6% 2.4%
Percent 6.4% 5.5% 6.1% 10.1% 24.6% 16.8% 20.1% 6.1% 4.3%
Race and Ethnicity White Alone Black Alone American Indian Alone Asian Alone Pacific Islander Alone Some Other Race Alone Two or More Races Hispanic Origin (Any Race)
Percent 77.4% 7.2% 0.3% 4.2% 0.1% 7.6% 3.2% 23.0%
Percent 70.7% 9.6% 0.4% 5.3% 0.1% 10.2% 3.9% 30.9%
Percent 67.0% 10.5% 0.4% 5.9% 0.1% 11.9% 4.2% 36.3%
Lifestyle Report (Tapestry)
Retail Marketplace Profile
Retail Marketplace Profile
Demographic and Income Profile
Task 1a & 1b: Discussion of Solutions STBD Reports 6 zip codes

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)

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 retailers 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

http://www.dollargeneral.com/OurStores/Pages/Stor eLocator.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:
Demographic and Income Profile Lifestyle Report (Tapestry) Retail MarketPlace Profile
6 Zip Code Market
Zip codes 32820, 32833
Summary Population Households Families Average Household Size Owner Occupied HUs Renter Occupied HUs Median Age Trends: 2008-2013 Annual Rate Population Households Families Owner HHs Median Household Income 2000 Number 350 410 423 588 498 336 168 43 33 $39,127 $50,260 $17,930 2000 Number 7,174 232 47 225 8 180 151 703
2000 8,015 2,862 2,156 2.80 2,197 665 35.9 Area 4.66% 4.68% 4.29% 4.59% 2.66% 2008 Number 493 572 459 1,091 1,106 700 530 112 112 $49,560 $62,586 $22,765 2008 Number 12,107 584 104 557 18 498 359 1,982
2008 14,227 5,175 3,774 2.75 4,320 855 37.8
2013 17,863 6,506 4,657 2.75 5,408 1,098 37.8 National 1.23% 1.26% 1.05% 1.07% 3.19% 2013 Number 552 473 548 656 2,192 846 933 145 161 $56,510 $69,278 $25,232 2013 Number 14,673 860 144 835 25 800 526 3,207
Percent 12.3% 14.4% 14.8% 20.6% 17.5% 11.8% 5.9% 1.5% 1.2%
Percent 9.5% 11.1% 8.9% 21.1% 21.4% 13.5% 10.2% 2.2% 2.2%
Percent 8.5% 7.3% 8.4% 10.1% 33.7% 13.0% 14.3% 2.2% 2.5%
Percent 89.5% 2.9% 0.6% 2.8% 0.1% 2.2% 1.9% 8.8%
Percent 85.1% 4.1% 0.7% 3.9% 0.1% 3.5% 2.5% 13.9%
Percent 82.1% 4.8% 0.8% 4.7% 0.1% 4.5% 2.9% 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.
Industry Group Motor Vehicle & Parts Dealers (NAICS 441) Automobile Dealers (NAICS 4411) Other Motor Vehicle Dealers (NAICS 4412) Auto Parts, Accessories, and Tire Stores (NAICS 4413) Furniture & Home Furnishings Stores (NAICS 442) Furniture Stores (NAICS 4421) Home Furnishings Stores (NAICS 4422) Electronics & Appliance Stores (NAICS 443/NAICS 4431) Bldg Materials, Garden Equip. & Supply Stores (NAICS 444) Building Material and Supplies Dealers (NAICS 4441) Lawn and Garden Equipment and Supplies Stores (NAICS 4442) Food & Beverage Stores (NAICS 445) Grocery Stores (NAICS 4451) Specialty Food Stores (NAICS 4452) Beer, Wine, and Liquor Stores (NAICS 4453) Health & Personal Care Stores (NAICS 446/NAICS 4461) Gasoline Stations (NAICS 447/NAICS 4471) Clothing and Clothing Accessories Stores (NAICS 448) Clothing Stores (NAICS 4481) Shoe Stores (NAICS 4482) Jewelry, Luggage, and Leather Goods Stores (NAICS 4483) Sporting Goods, Hobby, Book, and Music Stores (NAICS 451) Sporting Goods/Hobby/Musical Instrument Stores (NAICS 4511) Book, Periodical, and Music Stores (NAICS 4512) General Merchandise Stores (NAICS 452) Department Stores Excluding Leased Depts. (NAICS 4521) Other General Merchandise Stores (NAICS 4529) Miscellaneous Store Retailers (NAICS 453) Florists (NAICS 4531) Office Supplies, Stationery, and Gift Stores (NAICS 4532) Used Merchandise Stores (NAICS 4533) Other Miscellaneous Store Retailers (NAICS 4539) Nonstore Retailers (NAICS 454) Electronic Shopping and Mail-Order Houses (NAICS 4541) Vending Machine Operators (NAICS 4542) Direct Selling Establishments (NAICS 4543) Food Services & Drinking Places (NAICS 722) Full-Service Restaurants (NAICS 7221) Limited-Service Eating Places (NAICS 7222) Special Food Services (NAICS 7223)
Demand (Retail Potential) $28,163,377 $23,846,125 $2,472,896 $1,844,356 $4,655,061 $2,727,880 $1,927,181 $4,616,574 $4,550,804 $4,191,052 $359,752 $21,042,929 $20,057,661 $526,706 $458,562 $4,470,467 $16,123,448 $7,232,911 $5,493,651 $1,075,498 $663,762 $1,986,121 $916,963 $1,069,158 $12,358,783 $6,601,616 $5,757,167 $2,128,756 $289,906 $946,945 $51,689 $840,216 $2,616,961 $1,673,276 $120,705 $822,980 $18,933,198 $10,125,874 $6,253,318 $1,339,097
Supply (Retail Sales) $7,912,195 $4,179,716 $3,009,032 $723,447 $526,413 $0 $526,413 $968,083 $179,293 $38,889 $140,404 $10,352,832 $10,352,832 $0 $0 $857,522 $9,108,997 $0 $0 $0 $0 $187,998 $187,998 $0 $0 $0 $0 $1,431,892 $239,040 $69,371 $58,368 $1,065,113 $0 $0 $0 $0 $5,406,865 $495,829 $4,649,165 $0
Retail Gap $20,251,182 $19,666,409 -$536,136 $1,120,909 $4,128,648 $2,727,880 $1,400,768 $3,648,491 $4,371,511 $4,152,163 $219,348 $10,690,097 $9,704,829 $526,706 $458,562 $3,612,945 $7,014,451 $7,232,911 $5,493,651 $1,075,498 $663,762 $1,798,123 $728,965 $1,069,158 $12,358,783 $6,601,616 $5,757,167 $696,864 $50,866 $877,574 -$6,679 -$224,897 $2,616,961 $1,673,276 $120,705 $822,980 $13,526,333 $9,630,045 $1,604,153 $1,339,097
Leakage/Surplus Factor 56.1 70.2 -9.8 43.7 79.7 100.0 57.1 65.3 92.4 98.2 43.9 34.0 31.9 100.0 100.0 67.8 27.8 100.0 100.0 100.0 100.0 82.7 66.0 100.0 100.0 100.0 100.0 19.6 9.6 86.3 -6.1 -11.8 100.0 100.0 100.0 100.0 55.6 90.7 14.7 100.0
Number of Businesses 14 8 3 3 3 0 3 4 2 1 1 5 5 0 0 2 5 0 0 0 0 2 2 0 0 0 0 10 4 1 2 3 0 0 0 0 9 3 5 0
Industry Group
(Retail (Retail Sales) Potential)
Retail Gap
Factor
# of Bus
Food & Beverage Stores (NAICS 445) Grocery Stores (NAICS 4451)
$21,042,929 $20,057,661
$10,352,832 $10,352,832
$10,690,097 $9,704,829
34 31.9
5 5
Specialty Food Stores (NAICS 4452)

Beer, Wine, and Liquor Stores (NAICS 4453)
$526,706
$458,562
$0
$0
$526,706
$458,562
100
100
0
0
General Merchandise Stores (NAICS 452) Department Stores Excluding Leased Depts. (NAICS 4521) Other General Merchandise Stores (NAICS 4529)
$12,358,783 $6,601,616
$0 $0
$12,358,783 $6,601,616
100 100
0 0
$5,757,167
$0
$5,757,167
100
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

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
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 Conclusion/Location hypothesis: SR 50 within 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)
Traffic Counts / Average Annual Daily Traffic (FDOT)
11,894
35,640
32,007
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+coun t+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, lets understand the customer Research site criteria for dollar stores:
http://www.dollargeneral.com/OurStores/Pages/St oreGrowthRealEstate.aspx http://www.familydollar.com/RealestateManagem entDivision.aspx#REMSiteAndBuildingReq http://www.familydollar.com/faq.aspx#Real Estate Confirm previous assumptions
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/Resource s/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

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:

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 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 distance to DG store (about 6 miles)

Approx 3 mile radius
2) Drive-time (3, 5 & 10 min) 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 Retail MarketPlace Profile Standard Site Map report
Task 5: Define Trade Area STDB map & reports for SEC SR 50 & Cox RD 1) Radius distance to DG store (about 6 miles)
Approx 3 mile radius
Reports:
Demographic and Income Profile Lifestyle Retail MarketPlace Profile
Summary Population Households Families Average Household Size Owner Occupied Housing Units Renter Occupied Housing Units Median Age Trends: 2009-2014 Annual Rate Population Households Families Owner Households Median Household Income 2000 Number 475 541 563 754 923 534 339 80 49 $45,087 $55,395 $20,311 2000 Number 840 921 904 809 765 1,834 2,154 1,491 977 691 432 81
2000 11,900 4,312 3,145 2.76 3,317 995 34.4 Area 4.59% 4.42% 4.10% 4.50% 0.82% 2009 Number 545 660 605 1,351 1,824 1,319 1,363 404 283 $62,900 $77,336 $27,383 2009 Number 1,940 1,756 1,622 1,513 1,389 4,218 3,703 3,413 2,312 1,301 680 224
2009 24,073 8,354 5,970 2.88 6,200 2,154 34.1 State 1.48% 1.52% 1.27% 1.80% 0.82% 2014 Number 627 755 636 1,470 2,476 1,730 1,768 536 371 $65,520 $80,660 $28,324 2014 Number 2,453 2,294 2,090 1,714 1,683 5,035 4,878 3,983 3,047 1,895 801 259
2014 30,134 10,371 7,300 2.91 7,726 2,645 34.6 National 0.91% 0.94% 0.74% 1.19% 0.80%
Households by Income < $15,000 $15,000 - $24,999 $25,000 - $34,999 $35,000 - $49,999 $50,000 - $74,999 $75,000 - $99,999 $100,000 - $149,999 $150,000 - $199,999 $200,000+
Median Household Income Average Household Income Per Capita Income
Percent 11.2% 12.7% 13.2% 17.7% 21.7% 12.5% 8.0% 1.9% 1.2%
Percent 6.5% 7.9% 7.2% 16.2% 21.8% 15.8% 16.3% 4.8% 3.4%
Percent 6.0% 7.3% 6.1% 14.2% 23.9% 16.7% 17.1% 5.2% 3.6%
Population by Age Age 0 - 4 Age 5 - 9 Age 10 - 14 Age 15 - 19 Age 20 - 24 Age 25 - 34 Age 35 - 44 Age 45 - 54 Age 55 - 64 Age 65 - 74 Age 75 - 84 Age 85+
Percent 7.1% 7.7% 7.6% 6.8% 6.4% 15.4% 18.1% 12.5% 8.2% 5.8% 3.6% 0.7%
Percent 8.1% 7.3% 6.7% 6.3% 5.8% 17.5% 15.4% 14.2% 9.6% 5.4% 2.8% 0.9%
Percent 8.1% 7.6% 6.9% 5.7% 5.6% 16.7% 16.2% 13.2% 10.1% 6.3% 2.7% 0.9%
2000 Number 10,231 504 50 349 7 481 278 1,673
Percent 86.0% 4.2% 0.4% 2.9% 0.1% 4.0% 2.3% 14.1%
2009 Number 18,688 1,616 117 1,098 17 1,743 794 5,829
Percent 77.6% 6.7% 0.5% 4.6% 0.1% 7.2% 3.3% 24.2%
2014 Number 22,210 2,293 156 1,590 23 2,725 1,137 9,014
Percent 73.7% 7.6% 0.5% 5.3% 0.1% 9.0% 3.8% 29.9%
Industry Group Motor Vehicle & Parts Dealers (NAICS 441) Automobile Dealers (NAICS 4411) Other Motor Vehicle Dealers (NAICS 4412) Auto Parts, Accessories, and Tire Stores (NAICS 4413) Furniture & Home Furnishings Stores (NAICS 442) Furniture Stores (NAICS 4421) Home Furnishings Stores (NAICS 4422) Electronics & Appliance Stores (NAICS 443/NAICS 4431) Bldg Materials, Garden Equip. & Supply Stores (NAICS 444) Building Material and Supplies Dealers (NAICS 4441) Lawn and Garden Equipment and Supplies Stores (NAICS 4442) Food & Beverage Stores (NAICS 445) Grocery Stores (NAICS 4451) Specialty Food Stores (NAICS 4452) Beer, Wine, and Liquor Stores (NAICS 4453) Health & Personal Care Stores (NAICS 446/NAICS 4461) Gasoline Stations (NAICS 447/NAICS 4471)
Demand (Retail Potential) $92,515,863 $78,471,925 $8,102,076 $5,941,862 $16,073,202 $9,544,625 $6,528,577 $15,331,593 $14,841,678 $13,694,741 $1,146,937 $65,479,615 $62,378,354 $1,641,360 $1,459,901 $13,783,524 $50,587,296
Supply (Retail Sales) $10,335,409 $6,594,439 $2,101,747 $1,639,223 $3,795,795 $2,018,766 $1,777,029 $5,057,719 $2,600,661 $2,488,770 $111,891 $32,536,316 $31,644,689 $175,892 $715,735 $6,457,860 $15,217,594
Retail Gap $82,180,454 $71,877,486 $6,000,329 $4,302,639 $12,277,407 $7,525,859 $4,751,548 $10,273,874 $12,241,017 $11,205,971 $1,035,046 $32,943,299 $30,733,665 $1,465,468 $744,166 $7,325,664 $35,369,702
Leakage/Surplus Factor 79.9 84.5 58.8 56.8 61.8 65.1 57.2 50.4 70.2 69.2 82.2 33.6 32.7 80.6 34.2 36.2 53.7
Number of Businesses 12 7 2 3 6 2 4 5 5 3 2 10 7 1 2 6 5
Clothing and Clothing Accessories Stores (NAICS 448) Clothing Stores (NAICS 4481) Shoe Stores (NAICS 4482) Jewelry, Luggage, and Leather Goods Stores (NAICS 4483)
Sporting Goods, Hobby, Book, and Music Stores (NAICS 451) Sporting Goods/Hobby/Musical Instrument Stores (NAICS 4511) Book, Periodical, and Music Stores (NAICS 4512) General Merchandise Stores (NAICS 452) Department Stores Excluding Leased Depts. (NAICS 4521) Other General Merchandise Stores (NAICS 4529) Miscellaneous Store Retailers (NAICS 453) Florists (NAICS 4531) Office Supplies, Stationery, and Gift Stores (NAICS 4532) Used Merchandise Stores (NAICS 4533) Other Miscellaneous Store Retailers (NAICS 4539)
$23,373,115 $17,726,291 $3,382,717 $2,264,107

$6,404,452 $2,996,716 $3,407,736 $39,456,544 $21,387,112 $18,069,432 $6,828,433 $921,336 $3,108,813 $173,151 $2,625,133
$8,516,494 $6,332,700 $1,617,466 $566,328

$2,910,618 $1,215,404 $1,695,214 $31,818,937 $25,360,958 $6,457,979 $2,889,628 $256,450 $1,013,538 $57,517 $1,562,123
$14,856,621 $11,393,591 $1,765,251 $1,697,779

$3,493,834 $1,781,312 $1,712,522 $7,637,607 -$3,973,846 $11,611,453 $3,938,805 $664,886 $2,095,275 $115,634 $1,063,010
46.6 47.4 35.3 60.0

37.5 42.3 33.6 10.7 -8.5 47.3 40.5 56.5 50.8 50.1 25.4
11 7 2 2
7 5 2 5 3 2 15 4 4 2 5
2) Drive-time (3, 5 & 10 min) -> aerial Reports:
(slides focus on 5 min drive time, see exhibits for complete copies of reports)
Summary Population Households Families Average Household Size Owner Occupied Housing Units Renter Occupied Housing Units Median Age Trends: 2009-2014 Annual Rate Population Households Families Owner Households Median Household Income 2000 Number 120 122 129 165 152 86 52 11 8 $37,948 $48,628 $17,483 2000 Number 161 180 190 178 150 343 431 323 232 148 76 15 2000 Number 2,186 65 13 49 2 62 52 244
2000 2,428 866 632 2.80 642 224 35.3 Area 3.79% 3.77% 3.41% 3.99% 1.19% 2009 Number 128 154 122 303 305 195 158 45 32 $50,762 $64,695 $23,232 2009 Number 300 275 259 265 278 634 564 608 443 261 131 40 2009 Number 3,391 182 28 134 3 194 124 742
2009 4,058 1,442 1,020 2.81 1,096 346 35.3 State 1.48% 1.52% 1.27% 1.80% 0.82% 2014 Number 145 174 126 326 434 229 201 58 42 $53,853 $67,408 $24,132 2014 Number 365 347 320 280 316 799 663 662 571 358 158 48 2014 Number 3,917 258 37 193 4 302 175 1,141
2014 4,887 1,735 1,206 2.82 1,333 402 35.2 National 0.91% 0.94% 0.74% 1.19% 0.80%
Percent 14.2% 14.4% 15.3% 19.5% 18.0% 10.2% 6.2% 1.3% 0.9%
Percent 8.9% 10.7% 8.5% 21.0% 21.2% 13.5% 11.0% 3.1% 2.2%
Percent 8.4% 10.0% 7.3% 18.8% 25.0% 13.2% 11.6% 3.3% 2.4%
Percent 6.6% 7.4% 7.8% 7.3% 6.2% 14.1% 17.8% 13.3% 9.6% 6.1% 3.1% 0.6%
Percent 7.4% 6.8% 6.4% 6.5% 6.9% 15.6% 13.9% 15.0% 10.9% 6.4% 3.2% 1.0%
Percent 7.5% 7.1% 6.5% 5.7% 6.5% 16.3% 13.6% 13.5% 11.7% 7.3% 3.2% 1.0%
Percent 90.0% 2.7% 0.5% 2.0% 0.1% 2.6% 2.1% 10.0%
Percent 83.6% 4.5% 0.7% 3.3% 0.1% 4.8% 3.1% 18.3%
Percent 80.2% 5.3% 0.8% 4.0% 0.1% 6.2% 3.6% 23.3%
Industry Group Motor Vehicle & Parts Dealers (NAICS 441) Automobile Dealers (NAICS 4411) Other Motor Vehicle Dealers (NAICS 4412) Auto Parts, Accessories, and Tire Stores (NAICS 4413) Furniture & Home Furnishings Stores (NAICS 442) Furniture Stores (NAICS 4421) Home Furnishings Stores (NAICS 4422) Electronics & Appliance Stores (NAICS 443/NAICS 4431)
(Retail Potential) $5,890,130 $4,986,765 $519,892 $383,473 $979,212 $575,712 $403,500 $963,933
(Retail Sales) $3,527,219 $1,674,833 $1,236,234 $616,152 $390,622 $119,677 $270,945 $521,744
Retail Gap $2,362,911 $3,311,932 -$716,342 -$232,679 $588,590 $456,035 $132,555 $442,189
Factor 25.1 49.7 -40.8 -23.3 43.0 65.6 19.7 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) Lawn and Garden Equipment and Supplies Stores (NAICS 4442)
Food & Beverage Stores (NAICS 445) Grocery Stores (NAICS 4451) Specialty Food Stores (NAICS 4452) Beer, Wine, and Liquor Stores (NAICS 4453) Health & Personal Care Stores (NAICS 446/NAICS 4461) Gasoline Stations (NAICS 447/NAICS 4471)
$867,871
$74,435 $4,343,679 $4,140,398 $108,770 $94,511 $926,445 $3,346,938
$169,942
$18,451 $2,379,269 $2,326,412 $10,427 $42,430 $1,043,596 $2,875,487
$697,929
$55,984 $1,964,410 $1,813,986 $98,343 $52,081 -$117,151 $471,451
67.2
60.3 29.2 28.1 82.5 38.0 -5.9 7.6
Clothing and Clothing Accessories Stores (NAICS 448)

Clothing Stores (NAICS 4481) Shoe Stores (NAICS 4482) Jewelry, Luggage, and Leather Goods Stores (NAICS 4483)
$1,498,368
$1,137,550 $222,516 $138,302
$504,876
$375,416 $95,887 $33,573
$993,492
$762,134 $126,629 $104,729
49.6
50.4 39.8 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
Reports:
(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) Reports:
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 Population Households Families Average Household Size Owner Occupied Housing Units Renter Occupied Housing Units Median Age Trends: 2009-2014 Annual Rate Population Households Families Owner Households Median Household Income 2000 Number 291 321 343 465 367 226 115 29 23 $37,698 $48,019 $17,020 2000 Number 394 467 496 477 364 833 1,095 869 627 372 148 28 2000 Number 5,585 151 38 135 5 132 124 545
2000 6,170 2,212 1,642 2.79 1,674 538 35.5 Area 3.75% 3.80% 3.41% 4.02% 1.03% 2009 Number 350 407 334 863 807 451 320 74 65 $48,155 $59,400 $21,459 2009 Number 704 657 635 693 742 1,478 1,347 1,587 1,194 684 335 87 2009 Number 8,665 383 84 336 11 377 287 1,562
2009 10,142 3,670 2,625 2.76 2,898 772 36.3 0 0.00% 0.00% 0.00% 0.00% 0.00% 2014 Number 400 470 353 935 1,193 490 403 94 86 $50,698 $61,303 $22,196 2014 Number 855 823 777 710 853 1,963 1,496 1,702 1,542 939 417 117 2014 Number 10,051 544 112 481 14 586 406 2,421
2014 12,194 4,423 3,104 2.76 3,530 894 35.8 National 0.91% 0.94% 0.74% 1.19% 0.80%
Percent 13.3% 14.7% 15.7% 21.3% 16.8% 10.4% 5.3% 1.3% 1.1%
Percent 9.5% 11.1% 9.1% 23.5% 22.0% 12.3% 8.7% 2.0% 1.8%
Percent 9.0% 10.6% 8.0% 21.1% 27.0% 11.1% 9.1% 2.1% 1.9%
Percent 6.4% 7.6% 8.0% 7.7% 5.9% 13.5% 17.7% 14.1% 10.2% 6.0% 2.4% 0.5%
Percent 6.9% 6.5% 6.3% 6.8% 7.3% 14.6% 13.3% 15.6% 11.8% 6.7% 3.3% 0.9%
Percent 7.0% 6.7% 6.4% 5.8% 7.0% 16.1% 12.3% 14.0% 12.6% 7.7% 3.4% 1.0%
Percent 90.5% 2.4% 0.6% 2.2% 0.1% 2.1% 2.0% 8.8%
Percent 85.4% 3.8% 0.8% 3.3% 0.1% 3.7% 2.8% 15.4%
Percent 82.4% 4.5% 0.9% 3.9% 0.1% 4.8% 3.3% 19.9%
Industry Group Motor Vehicle & Parts Dealers (NAICS 441) Automobile Dealers (NAICS 4411) Other Motor Vehicle Dealers (NAICS 4412) Auto Parts, Accessories, and Tire Stores (NAICS 4413)
(Retail Potential) $19,113,689 $16,172,819 $1,704,056 $1,236,814
(Retail Sales) $7,106,818 $3,394,923 $2,711,841 $1,000,054
Retail Gap $12,006,871 $12,777,896 -$1,007,785 $236,760
Factor 45.8 65.3 -22.8 10.6
Furniture & Home Furnishings Stores (NAICS 442) Furniture Stores (NAICS 4421) Home Furnishings Stores (NAICS 4422)
Electronics & Appliance Stores (NAICS 443/NAICS 4431) Bldg Materials, Garden Equip. & Supply Stores (NAICS 444) Building Material and Supplies Dealers (NAICS 4441) Lawn and Garden Equipment and Supplies Stores (NAICS 4442)
$3,100,941 $1,818,210 $1,282,731

$3,093,896 $3,039,239 $2,795,991 $243,248
$457,691 $0 $457,691
$734,237 $174,029 $67,549 $106,480
$2,643,250 $1,818,210 $825,040

$2,359,659 $2,865,210 $2,728,442 $136,768
74.3 100.0 47.4

61.6 89.2 95.3 39.1
Food & Beverage Stores (NAICS 445) Grocery Stores (NAICS 4451) Specialty Food Stores (NAICS 4452) Beer, Wine, and Liquor Stores (NAICS 4453)
Health & Personal Care Stores (NAICS 446/NAICS 4461) Gasoline Stations (NAICS 447/NAICS 4471) Clothing and Clothing Accessories Stores (NAICS 448) Clothing Stores (NAICS 4481) Shoe Stores (NAICS 4482) Jewelry, Luggage, and Leather Goods Stores (NAICS 4483)
$14,183,952 $13,524,227 $355,136 $304,589

$3,025,857 $10,994,201 $4,852,499 $3,686,226 $726,265 $440,008
$7,132,896 $7,132,896 $0 $0
$1,243,155 $6,505,653 $0 $0 $0 $0
$7,051,056 $6,391,331 $355,136 $304,589

$1,782,702 $4,488,548 $4,852,499 $3,686,226 $726,265 $440,008
33.1 30.9 100.0 100.0

41.8 25.6 100.0 100.0 100.0 100.0
Sporting Goods, Hobby, Book, and Music Stores (NAICS 451) Sporting Goods/Hobby/Musical Instrument Stores (NAICS 4511) Book, Periodical, and Music Stores (NAICS 4512) General Merchandise Stores (NAICS 452) Department Stores Excluding Leased Depts. (NAICS 4521) Other General Merchandise Stores (NAICS 4529)
$1,331,722 $616,993 $714,729 $8,324,512 $4,438,404 $3,886,108
$123,400 $123,400 $0 $0 $0 $0
$1,208,322 $493,593 $714,729 $8,324,512 $4,438,404 $3,886,108
83.0 66.7 100.0 100.0 100.0 100.0
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
Site Selection Checklist: Location

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: Site Data

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: Owner/Financial/Legal

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: Zoning/Utilities/Comps

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)
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 Family Dollar Dollar General Family Dollar Family Dollar Family Dollar Address 4784 N Carl G Hwy 580 W Palm DR 1058 Berkley RD 1626 18th AVE S 12840 SW SR 45 City Hernando Florida City Auburndale ST Petersburg Gainvesville FL FL FL FL FL ST Zip 34442 33034 33823 33712 32618 SF 8,320 9,100 9,180 9,900 8,000 44,500 Rent 117,863 156,955 137,329 150,000 105,435 667,582 Rent/SF 14.17 17.25 14.96 15.15 13.18 15.00
Family Dollar Annual Report FY 2011
FDO Gross Margin Analysis / Rent Range

$ %
Sales COGS Gross Margin SG&A Net Income AVG Sales per Store Estimate for subject Rent @
8,547,835,000 5,515,540,000 3,032,295,000 2,394,223,000 638,072,000 1,259,814 1,511,776 122,000 8.1% 7.5% 35.5%
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)
Industry Group Motor Vehicle & Parts Dealers (NAICS 441) Automobile Dealers (NAICS 4411) Other Motor Vehicle Dealers (NAICS 4412) Auto Parts, Accessories, and Tire Stores (NAICS 4413) Furniture & Home Furnishings Stores (NAICS 442) Furniture Stores (NAICS 4421) Home Furnishings Stores (NAICS 4422) Electronics & Appliance Stores (NAICS 443/NAICS 4431) Bldg Materials, Garden Equip. & Supply Stores (NAICS 444) Building Material and Supplies Dealers (NAICS 4441) Lawn and Garden Equipment and Supplies Stores (NAICS 4442) Food & Beverage Stores (NAICS 445) Grocery Stores (NAICS 4451) Specialty Food Stores (NAICS 4452) Beer, Wine, and Liquor Stores (NAICS 4453) Health & Personal Care Stores (NAICS 446/NAICS 4461)
Demand (Retail Potential) $28,163,377 $23,846,125 $2,472,896 $1,844,356 $4,655,061 $2,727,880 $1,927,181 $4,616,574 $4,550,804 $4,191,052 $359,752 $21,042,929 $20,057,661 $526,706 $458,562 $4,470,467
Supply (Retail Sales) $7,912,195 $4,179,716 $3,009,032 $723,447 $526,413 $0 $526,413 $968,083 $179,293 $38,889 $140,404 $10,352,832 $10,352,832 $0 $0 $857,522
Retail Gap $20,251,182 $19,666,409 -$536,136 $1,120,909 $4,128,648 $2,727,880 $1,400,768 $3,648,491 $4,371,511 $4,152,163 $219,348 $10,690,097 $9,704,829 $526,706 $458,562 $3,612,945
Leakage/Surplus Factor 56.1 70.2 -9.8 43.7 79.7 100.0 57.1 65.3 92.4 98.2 43.9 34.0 31.9 100.0 100.0 67.8
Number of Businesses 14 8 3 3 3 0 3 4 2 1 1 5 5 0 0 2
Gasoline Stations (NAICS 447/NAICS 4471)

Clothing and Clothing Accessories Stores (NAICS 448) Clothing Stores (NAICS 4481) Shoe Stores (NAICS 4482) Jewelry, Luggage, and Leather Goods Stores (NAICS 4483) Sporting Goods, Hobby, Book, and Music Stores (NAICS 451) Sporting Goods/Hobby/Musical Instrument Stores (NAICS 4511) Book, Periodical, and Music Stores (NAICS 4512) General Merchandise Stores (NAICS 452) Department Stores Excluding Leased Depts. (NAICS 4521) Other General Merchandise Stores (NAICS 4529) Miscellaneous Store Retailers (NAICS 453) Florists (NAICS 4531) Office Supplies, Stationery, and Gift Stores (NAICS 4532) Used Merchandise Stores (NAICS 4533) Other Miscellaneous Store Retailers (NAICS 4539) Nonstore Retailers (NAICS 454) Electronic Shopping and Mail-Order Houses (NAICS 4541) Vending Machine Operators (NAICS 4542) Direct Selling Establishments (NAICS 4543) Food Services & Drinking Places (NAICS 722) Full-Service Restaurants (NAICS 7221) Limited-Service Eating Places (NAICS 7222) Special Food Services (NAICS 7223) Drinking Places - Alcoholic Beverages (NAICS 7224)
$16,123,448
$7,232,911 $5,493,651 $1,075,498 $663,762 $1,986,121 $916,963 $1,069,158 $12,358,783 $6,601,616 $5,757,167 $2,128,756 $289,906 $946,945 $51,689 $840,216 $2,616,961 $1,673,276 $120,705 $822,980 $18,933,198 $10,125,874 $6,253,318 $1,339,097 $1,214,909
$9,108,997
$0 $0 $0 $0 $187,998 $187,998 $0 $0 $0 $0 $1,431,892 $239,040 $69,371 $58,368 $1,065,113 $0 $0 $0 $0 $5,406,865 $495,829 $4,649,165 $0 $261,871
$7,014,451
$7,232,911 $5,493,651 $1,075,498 $663,762 $1,798,123 $728,965 $1,069,158 $12,358,783 $6,601,616 $5,757,167 $696,864 $50,866 $877,574 -$6,679 -$224,897 $2,616,961 $1,673,276 $120,705 $822,980 $13,526,333 $9,630,045 $1,604,153 $1,339,097 $953,038
27.8
100.0 100.0 100.0 100.0 82.7 66.0 100.0 100.0 100.0 100.0 19.6 9.6 86.3 -6.1 -11.8 100.0 100.0 100.0 100.0 55.6 90.7 14.7 100.0 64.5
5
0 0 0 0 2 2 0 0 0 0 10 4 1 2 3 0 0 0 0 9 3 5 0 1
Industry Group Motor Vehicle & Parts Dealers (NAICS 441) Automobile Dealers (NAICS 4411) Other Motor Vehicle Dealers (NAICS 4412) Auto Parts, Accessories, and Tire Stores (NAICS 4413) Furniture & Home Furnishings Stores (NAICS 442) Furniture Stores (NAICS 4421) Home Furnishings Stores (NAICS 4422) Electronics & Appliance Stores (NAICS 443/NAICS 4431) Bldg Materials, Garden Equip. & Supply Stores (NAICS 444) Building Material and Supplies Dealers (NAICS 4441) Lawn and Garden Equipment and Supplies Stores (NAICS 4442) Food & Beverage Stores (NAICS 445) Grocery Stores (NAICS 4451) Specialty Food Stores (NAICS 4452) Beer, Wine, and Liquor Stores (NAICS 4453) Health & Personal Care Stores (NAICS 446/NAICS 4461) Gasoline Stations (NAICS 447/NAICS 4471) Clothing and Clothing Accessories Stores (NAICS 448) Clothing Stores (NAICS 4481) Shoe Stores (NAICS 4482) Jewelry, Luggage, and Leather Goods Stores (NAICS 4483) Sporting Goods, Hobby, Book, and Music Stores (NAICS 451) Sporting Goods/Hobby/Musical Instrument Stores (NAICS 4511) Book, Periodical, and Music Stores (NAICS 4512) General Merchandise Stores (NAICS 452) Department Stores Excluding Leased Depts. (NAICS 4521) Other General Merchandise Stores (NAICS 4529) Miscellaneous Store Retailers (NAICS 453) Florists (NAICS 4531) Office Supplies, Stationery, and Gift Stores (NAICS 4532) Used Merchandise Stores (NAICS 4533) Other Miscellaneous Store Retailers (NAICS 4539) Nonstore Retailers (NAICS 454) Electronic Shopping and Mail-Order Houses (NAICS 4541) Vending Machine Operators (NAICS 4542) Direct Selling Establishments (NAICS 4543) Food Services & Drinking Places (NAICS 722) Full-Service Restaurants (NAICS 7221) Limited-Service Eating Places (NAICS 7222) Special Food Services (NAICS 7223) Drinking Places - Alcoholic Beverages (NAICS 7224)
Demand (Retail Potential) $28,163,377 $23,846,125 $2,472,896 $1,844,356 $4,655,061 $2,727,880 $1,927,181 $4,616,574 $4,550,804 $4,191,052 $359,752 $21,042,929 $20,057,661 $526,706 $458,562 $4,470,467 $16,123,448 $7,232,911 $5,493,651 $1,075,498 $663,762 $1,986,121 $916,963 $1,069,158 $12,358,783 $6,601,616 $5,757,167 $2,128,756 $289,906 $946,945 $51,689 $840,216 $2,616,961 $1,673,276 $120,705 $822,980 $18,933,198 $10,125,874 $6,253,318 $1,339,097 $1,214,909
Supply (Retail Sales) $7,912,195 $4,179,716 $3,009,032 $723,447 $526,413 $0 $526,413 $968,083 $179,293 $38,889 $140,404 $10,352,832 $10,352,832 $0 $0 $857,522 $9,108,997 $0 $0 $0 $0 $187,998 $187,998 $0 $0 $0 $0 $1,431,892 $239,040 $69,371 $58,368 $1,065,113 $0 $0 $0 $0 $5,406,865 $495,829 $4,649,165 $0 $261,871
Retail Gap $20,251,182 $19,666,409 -$536,136 $1,120,909 $4,128,648 $2,727,880 $1,400,768 $3,648,491 $4,371,511 $4,152,163 $219,348 $10,690,097 $9,704,829 $526,706 $458,562 $3,612,945 $7,014,451 $7,232,911 $5,493,651 $1,075,498 $663,762 $1,798,123 $728,965 $1,069,158 $12,358,783 $6,601,616 $5,757,167 $696,864 $50,866 $877,574 -$6,679 -$224,897 $2,616,961 $1,673,276 $120,705 $822,980 $13,526,333 $9,630,045 $1,604,153 $1,339,097 $953,038
Leakage/Surplus Factor 56.1 70.2 -9.8 43.7 79.7 100.0 57.1 65.3 92.4 98.2 43.9 34.0 31.9 100.0 100.0 67.8 27.8 100.0 100.0 100.0 100.0 82.7 66.0 100.0 100.0 100.0 100.0 19.6 9.6 86.3 -6.1 -11.8 100.0 100.0 100.0 100.0 55.6 90.7 14.7 100.0 64.5
Number of Businesses 14 8 3 3 3 0 3 4 2 1 1 5 5 0 0 2 5 0 0 0 0 2 2 0 0 0 0 10 4 1 2 3 0 0 0 0 9 3 5 0 1

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
Sherwin Williams
www.sherwin-williams.com
Ace Hardware 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 retailers 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 tenants 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 tenants 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
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
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 tenants perspective, i.e., Tenant Financial Feasibility for subject location Tenants 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 Sales Model Valuation

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Retail Sales Model Valuation

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Retail Sales Valuation Model Project

Integra Training Session Outline

CCIM Real Estate Feasibility Model

Goals and Objectives Alternatives Decision Criteria Go/No Go Decision Points

Location, Site & Building Analysis

Political & Legal Analysis

Real estate is space for people.

Retail Interesting Facts

Top 100 retailers 259,400 stores

Almost 50% of total US non-automotive retail sales

2011 Top 100 US Retailers

Sales 316,083,000,000 264,186,000,000 85,491,000,000 68,466,000,000

Hoffman Estates, Ill.

Apple Stores / iTunes

Company Alimentation Couche-Tard

Headquarters Tempe, Ariz.

# Stores 2011 4,050

Stater Bros. Holdings

San Bernardino, Calif.

The Sports Authority

Retail Business Life Cycle

Real estate is space for people.

Source: Monthly Retail Trade and Food Services

Year 2007 2008 2009 2010 2011 2012

Jan 363,340 376,031 338,246 348,585 375,739 400,550

Feb 364,458 372,110 337,081 348,794 378,934 404,692

Mar 367,902 372,846 331,380 355,695 382,115 406,200

Apr 366,466 374,810 332,258 358,023 383,810 404,112

May 371,045 376,189 335,557 355,693 383,733 403,641

Jun 367,773 377,289 339,659 354,404 387,045 400,635

Jul 369,539 375,214 340,600 355,436 388,064 403,176

Aug 371,085 373,741 348,621 358,715 388,595 NA

Sep 374,620 366,877 339,523 361,756 392,354 NA

Oct 374,485 353,187 342,223 366,507 395,995 NA

Nov 378,939 342,298 346,812 370,165 397,868 NA

Dec 376,660 333,348 348,184 372,587 398,012 NA

Definition: NAICS 44-45, Retail Trade

NAICS & Retail Sales

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

2007 Economic Census

Total Retail Sales 2011

Retail Business Trends

Retail Business Trends

Convenience & Value Efficiency

Retail Trade Sales--Total and E-Commerce

E-commerce as % E-commerce of total sales

Retail trade, total

General merchandise stores

Retail Trade Sales--Total and E-Commerce

Retail Trade Sales--Total and E-Commerce

Amazon 2011 10K

Amazon 2011 10K

Retail Real Estate Trends

Technology creates more efficient use of inventory & space

Retail Real Estate Trends

Retail Real Estate Trends

Why More Open Stores

Factors Affecting Store Location

Competition (supply) Cost of operating store

How Do Retailers Evaluate Sites

Complimentary (traffic generators) Principle of Cumulative Attractiveness

Retailers Financial Feasibility

Retail Gross Margin