How to Select a Retail Location
Everyday retailers, brokers and owners send and receive dozens of flyers regarding properties that are available for lease or for sale. In addition to a flyer exchange, there are literally thousands of searches being conducted on the various web based listing services available to the marketplace (Loopnet, CoStar, Xceligent, etc…). If you are not specific to the geographic location, price, amenities, type of center and co-tenants, you can easily become overwhelmed with the results, conversely if you are too specific you may miss out on some good opportunities.
How do you quickly decide which locations to look at and which to eliminate from your search results?
Easy, you use the 3L Score!
Wouldn’t it be helpful if you could quickly rank the economic quality of the neighborhoods around every possible business location on a scale of 1 to 100? The ability to do this would to help you decide which property to review more in-depth and which to eliminate from your search.
Listing #1 = Stable
What does this score mean, is this the best location for my business?
70-85 Stable – This score range reflects stable household makeup and strong area desirability. Present households want to remain at their address, but there is some vulnerability to individual household economics changing due to some probable household income change. This change may be absorbed in a way that does not require a move out of the location, but should a move out be required, the household that replaces it will probably be rock solid in terms of its future income stability.
Pay close attention to the age cohort part of your 3L Score if your address falls in this 70-85 range. If Echo Boomers and/or Generation X are dominant, the area holds very strong stability for future household formations in these age cohorts.
If there is a dominance of Generation X (as this group is numerically smaller than Baby Boomers, Echo Boomers and Digital Generation look to see if local population for this group is greater than 13%), increasing household incomes are probable as this generation moves into their mid 40′s where they will be at their peak earning and spending potential. There will be increased discretionary dollars available for spending as well, particularly if the Digital Generation is the next highest (or even higher) age cohort in the area. Concurrently within this particular combination, if white collar employment exceeds blue collar for your area (reference the residential occupation make-up part of your 3L score) you have hit the sweet spot in terms of household formations changing positively and as a retailer and/or service provider you should experience opportunities for growth. Pay close attention to the changes to the Willingness to Spend Score for this area over the next 6 months, as the score moves above 50 it is an indication that there are improvements to the local housing market attracting new stable households.
If the Baby Boomers are the dominant age cohort for your area (greater than 27% of the local population), and you are in the 70-85 range of Stability Strength the area is fairly solid for the immediate future, but household incomes may become more vulnerable in the coming years as the older Baby Boomers move towards retirement, increasing the probability that they will be living on a fixed income. Household make-up and formation will remain stable but spending allocations and patterns may change.
Want to learn more? Watch our demo video here
The 3L Score uses proprietary algorithms to rank the economic stability of any location in the United States.
The 3L Score takes the most important economic information (employment, household growth, housing performance, income, population, etc…) and uses that information to rank the current economic stability of the neighborhoods surrounding any retail location on a scale of 1-100 utilizing a proprietary algorithm developed by our team. The system will then identify if the people who live around your locations are willing to spend money today or if they are hoarding cash as a result of underperforming housing and job markets. Lastly, we tell you exactly what each score means in a narrative, easy to read and understand format (think of it as an executive summary), rather than just giving you pages of data to sort through.
Now What? Finding the best location is easy with the 3L Score.
Knowing and understanding the stability strength scores for the listings in your search results would allow you to prioritize which listings to review first based upon the overall quality of each location. Obviously, you will have your own requirements to meet before making a purchase or signing a lease, using the 3L Score to prioritize your search results will help you to focus your time on higher quality, revenue generating locations.
Visit our website http://www.3lscore.com and watch our demo to see how the 3L Score can help you select the best location for your business.