A market survey, or site selection survey, is a tool used by commercial tenants when considering a relocation or adding a new location to their existing portfolio. A market survey can take many forms, but fundamentally it presents all available properties which match a certain set of criteria, as defined by the tenant. As such, a successful market survey needs both well defined parameters from the tenant side and an exhaustive search methodology executed on their behalf.
Timing is critical when executing a market survey and there are two main things to take into consideration (which may at times feel like they are conflicting). The first is allowing enough time prior to the desired commencement date so that you maintain leverage in any negotiations, and to ensure you have enough time to find a good site for your needs. The second is having an approved business case and being ready to move on an opportunity should it present itself.
Different markets will ideally have subtle differences in your approach to timing. For example, a very in-demand market, where the landlord holds greater leverage will require you to be able to act promptly on any opportunity that presents itself. Available sites will move off the market quickly and will be lost if time is required to finalize a business case or obtain other required approvals before moving forward. Another challenging situation can be looking for space in a small tertiary market with minimal commercial real estate inventory. In this case, giving yourself adequate lead time is critical because uncovering potential opportunities can be an in-depth and time consuming process. Opportunities often come from “off-market” or through word of mouth. If not enough time is allowed to find a suitable option you may find yourself with limited or inappropriate sites.
A knowledgeable partner with a deep understanding of your business can help you navigate the timing of when to get your site selection survey completed depending on the realities of the subject market.
Clearly defined criteria will help ensure that the site selection process is focused and effective. Ideally these are developed through good communication with your real estate partner and based on a profound knowledge of your business needs.
In defining your site selection parameters, there are many things to take into consideration:
- Desired geographic area
- The physical characteristics of the building
- Required zoning
- Positioning in the market
- And more
Within each of the above categories there are numerous issues to discuss and subtleties to tackle. Often they can also be in conflict with one another. For example, the ideal building with great positioning vis-a-vis your competition may require a zoning variation, which in turn would throw off the required timing of opening that location. Compromises will probably need to be made. A good market survey will lay out how a site responds to all of your defined criteria, allowing you to move forward with a decision based on the best information possible.
In considering your parameters, it’s important to identify which ones are required versus desired. As it is unlikely that a site will be found which matches all conditions, it is important to identify which ones are a deal breaker and which ones allow for some flexibility. For example, a minimum clear height may be required in order to accommodate automation and modernization of a warehouse, which is the catalyst for the relocation in the first place. In this case, no options under a certain clear height can be considered as it negates the initial reason for the move. Meanwhile, perhaps a minimum parking requirement can be waived as additional parking options may be available in the surrounding area or employees may be encouraged to use public transportation instead.
There is no one-stop-shop site selection resource. Each market demands a unique approach to uncovering all potential sites available and is dependent on: the structure of the real estate market, size of the population, primary economic sectors, and more. Finding a suitable storefront or industrial warehouse in Edmonton versus Medicine Hat, for example, will require very different approaches to ensure success. One has a developed real estate market with numerous brokerages using sophisticated marketing aimed at both local and foreign prospective tenants, while the other is much more locally based with properties often exchanging hands without coming onto the formal real estate market at all. The fundamental key to success is having a network of connections and resources in whichever market you are exploring.
Resources can include:
- Local brokerages
- Economic development groups
- Municipal real estate offices
- Business associations
- Aggregate real estate sites
- Local business owners
- The news
The use of an exhaustive methodology is important to ensure you uncover all potential sites. An incomplete survey means you are making a critical decision about your business with incomplete information.
Once a comprehensive search has been executed it’s important to have a clear comparison of available sites. This is achieved by ensuring a clear, well-designed deliverable that presents relatable information across options. For example, total annual gross rent must be accounted for in the same way across the board (is electricity included or metered separately? Have additional fees for yard space been incorporated?). Clarity is supported via images, mapping, and other ancillary visuals.
Market surveys are not equal. There is a vast difference between a survey which captures well defined parameters on a thought out timeline via expert search methodology and a superficial survey which pulls easy to access (and often out of date) information from a database.
Here are some of the main red flags to look out for of a poorly executed market survey:
- Availability and suitability of options have not been verified
- Out of date information
- Information is simply re-branded, but not analyzed or improved on
- Sites do not match the defined parameters (not tailored to the tenant)
Site selection is an enormously important part of your business and one that will affect your bottom line for many years to come. There is significant value to be captured in ensuring you are making a decision based on the best possible information. Navigating timing, identifying criteria, and uncovering all potential options can be a daunting task. Partnering with a commercial real estate market intelligence expert to navigate the process with you is the best way to ensure you’re getting a clear and comprehensive overview of your site options in any market.
Landmark’s Market Intelligence team is composed of market research analysts with multi disciplinary experience in urban planning, geomarketing, urban economics, and more. Their experience encompases all Canadian markets, regardless of size and location. They first work to understand your particular portfolio, then provide curated market intelligence that will ensure you’re making the best site selection decision, every time.