‘Art’ of site selection gains an assist from science
Franchisors are tapping the latest high-tech tools to up their chances of finding the best locations. But better tools will never replace a drive to the site to see what the customer will actually experience.
Any real estate veteran will say the process of finding good real estate is still a bit of an art form. But these days, the science part of that equation is playing a bigger role in location decisions.
The tools and processes used to identify new markets, trade areas and real estate locations are becoming increasingly sophisticated. The myriad of available tools can take a growing mountain of data and crunch those numbers into detailed site analytics, scoring systems and performance forecasting models.
“Post-recession, there has been a definite shift toward more science behind the site selection process,” says Craig Killman, a senior vice president and lead retail broker in Southern California for JLL. “Today, tenants cannot afford to make any mistakes. The costs are just too high to open up a facility that is not going to perform and add money to the bottom line.”
The “old school” methods of going out in the field and doing market and property tours, knowing the trade areas and landlords, and simply having good instincts will always be an important part of site selection. But real estate experts are accessing more science before they get in the car to make sure they are “laser specific” to their client’s needs, notes Killman.
More and more data is available today than even the beginning of this year. So data is always advancing, notes Stephen Polanski, senior vice president of sales at Buxton in Fort Worth, Texas.
The biggest trend from a technology standpoint is getting data and information into the hands of clients more quickly, adds Polanski. Buxton rolled out its Scout Touch in early 2014. The app allows retail executives, franchisors and franchisees to get answers in real time literally at the click of a button. “So, the new bells and whistles features are about getting the information faster so that you can make decisions faster,” he says.
A variety of off-the-shelf and custom tools are available these days. Buxton, Site Analytics and Pitney Bowes’ MapInfo are just a few of the firms that provide locational intelligence solutions. “It is still more art than science, but we are getting deeper into the science,” says Eric Newman, executive vice president and chief development officer at Bojangles’ Famous Chicken ‘n Biscuits in Charlotte, North Carolina.
Bojangles’ uses three different layers in its site selection process. The company continues to use its “pre-technology” point system that looks at factors such as population density, demographics and various other factors to score a potential location. Bojangles’ also spent 18 months with Buxton to develop a customized site-analytics program to analyze potential locations. The firm has been using that Buxton model since early 2013.
The final piece is the human element in doing actual site visits and market tours. Even though the technology does an awful lot of “slicing and dicing” of demographics, household incomes and data on traffic counts, a franchise group still needs to be mindful of key factors such as visibility, access and traffic patterns, notes Newman. “The computerized systems can’t get into the car and drive and get a sense of the layout and what the customer is going to experience,” he says.
That being said, the computer systems do provide insight on patterns that an individual might not see. “It is very helpful to lay things out as you are going into new markets, or even fill out existing markets,” adds Newman.
One example of the newer uses: Brokers have long used mapping tools to illustrate the customer base for a particular location within a 3-, 5- or perhaps 10-mile radius. Now brokers can use a similar approach to map the customer base for a store based on drive times to show a client how far the customer reach is based on a 10- or 15-minute drive. “That is a very effective tool to show them the depth and breadth of a trade area,” says Killman.
One of the biggest benefits of these technology tools is the efficiencies they create by being able to quickly eliminate potential sites that don’t fit the criteria. Tampa-based FSC Franchise Co. has been working with Site Analytics since 2011. The firm uses its analytics model to “score” potential locations or trade areas for its Beef ‘O’ Brady’s.
More recently, the company also started using the technology for its newer Brass Tap concept. Based on the score, the Site Analytics system provides a forecast on how that potential location is likely to perform. “It’s not only about the precision of selecting a site, but it is about being able to speed up the process of finding locations,” says Chris Elliott, CEO of FSC Franchise Co.
For example, FSC uses Costar, which is an online searchable database of available real estate locations for lease or sale. If the company is planning to open a new location in a particular city, such as Nashville, they can go to Costar and look for available space in a particular area of the city.
FSC can then score those locations using their Site Analytics system. If the location receives an acceptable score, then the company can take the next step of requesting more information or visiting the market. “If it doesn’t get an acceptable score, we just move on,” says Elliott. “This makes the process a whole lot more efficient than it used to be.”