Retail properties are a popular choice for commercial real estate investors. With stable tenants and a steady stream of traffic, they can offer a good return on investment. Here are some key factors to consider before investing in a new retail development to increase the likelihood of a successful venture.
1. Location must provide enough foot traffic to be viable
The planning stage of the retail project should include a study to determine whether the proposed location can generate enough foot traffic to support a retail development. The company conducting the demographic study would also be able to determine whether a shopping mall would be a good fit for the neighbourhood and if local residents would shop there.
2. The size of the shopping centre must fit the area and the target market
Small shopping centres cater to local residents who want the convenience of being able to stop in frequently to make purchases. Larger centres are more of a destination and have the potential to attract a larger target market. A small centre could be located near a larger one without creating too much competition for customers, but having two similar-sized centres in proximity is not the best approach for investors looking for a profitable venture.
3. The right tenant mix is needed to draw in consistent foot traffic
Building a shopping mall is only part of the equation when planning for commercial retail property success. Developers must ensure that the right tenant mix is presented to consumers so that they will be encouraged to visit the mall often. The results of the demographic study can help to identify the characteristics of the neighbourhood. Developers can then take steps to attract the stores and services which would be the best fit for that particular area.
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