The advantages of a well located retail investment are inarguable. As we embark upon the lengthy run-up to Christmas, the health of the high street is very much on the minds of owners and tenants alike. Most high streets and shopping centres will see a steady increase in footfall from now until the big day itself so making the most of passing trade will have very real financial consequences. So what should you look out for if you’re making a retail investment? Where should regional profile come into play? And how can technology help?
As an investor, you must consider the level of risk that the location of a retail unit poses. Practical aspects such as the proximity of other retail units, whether the site is high street or shopping outlet, and proximity to transport or residential areas all make an impact. However, in this information age, you can go much further in your assessment of risk. By understanding the demographics of an area, you can deduce which fields of retail are likely to succeed, and choose your investment location accordingly.
In fact, there is no single perfect spot. Even the massive London flagship sites at the intersection between Oxford and Regent streets only really work for a certain type of retail. This means that for building owners of prime locations, the pool of potential tenants can be limited and agreeing terms can be a lengthy process. So investors should balance the advantages of the clear desirability of a prime retail location with the fact that these sites can take more time and expertise to lease. Contracting a commercial property agent to help to source tenants and to negotiate complicated lease terms is one solution here to limit the impact of these challenges.
So looking beyond high profile sites, how do you go about investing wisely? Consider retail trends in your chosen area and which locations might be more attractive to these prospective tenants. This is where the commercial advice of property managers in invaluable: the local and historical knowledge is all there. The retail industry experiences acute regional variations, with neighbouring towns often having marked differentials in demographic and profile. Making use of the intricate knowledge of area variations that commercial property professionals can offer will make the difference for the ongoing success of a retail investment.
How do locations perform over the course of a year? Wherever you choose to invest, there is a certain amount of ebb and flow; this is simply the nature of retail. However, having access to detailed and historical knowledge of the cyclical patterns of business across a town or county will help an investor to understand the commercial environment in which they are investing.
Data technology is really revolutionising the decisions that investors can make with regards to location. Geofencing software uses the location-aware mobile devices of consumers within a specified area to collect data based on a customer’s interactions within that area. This data can be harvested to profile the real demographics of a retail zone which can then influence your choice of location and inform tenancy types. As commercial property professionals, it is our job to understand the benefits that using this cutting-edge technology could offer an investor, where it is most relevant and how to combine it with wider and more traditional commercial knowledge and experience.
While neither investors nor tenants are able to predict the future, location is surely a key consideration in achieving a long and lucrative tenancy and in turn a sound investment. Success lies in using the tools on offer: developing technology, local networks and the services of commercial property professionals.
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