Trade Area Analysis
Trade Area Analysis assists owners and developers of consumer driven properties such as shopping centres, retail stores and movie theatres measure the quantum and type of trade available within their catchment area so that they can (1) reduce the risk of erecting the wrong sized building and, (2) fine tune their tenant or product mix to the demographic and expenditure characteristics of their market.
We use our Geographic Information System (GIS) to model the Primary, Secondary and Tertiary trade areas of the subject location ... and the trade areas of existing and proposed competitors. We then measure the quantum of demand in each trade area, using demographic and income data (Statistics Canada and other sources) and expenditure information (Environics Analytics), and a gravity model to calculate how much demand can be captured by the subject property. This demand is then converted into building size, and the results are communicated to our client.
Scope of Work
We undertake Trade Area Analysis for any type of real estate that is catchment area dependant:
- ABMs
- Banks
- Coffee Shops
- Fast Food Outlets
- Health Care Facilities
- Recreational Facilities
- Restaurants
- Retail Stores
- Shopping Centres
- Movie Theatres
The Process
Having defined, through consultation with our client, the scope of the assignment, we proceed through a sequence of research, analysis and recommendation.
(1) |
We compile a list of existing and proposed developments that will compete with our client’s property and geo-code their locations on a map of the study area. Using our Geographic Information System (GIS) we delineate the competitors’ Primary, Secondary and Tertiary trade areas. Using Statistics Canada’s demographic and income data, and Environics Analytics’ expenditure data, together with our GIS’ market penetration models, we determine the demand captured by each of the competing properties. |
(2) |
We plot the subject property’s location on a map of the study area. Using our GIS we delineate its potential catchment area and model its impact on each of the competitors’ trade areas. We then ascertain the subject property’s market penetration and calculate the dollar market demand that it will capture. Then we convert that demand into rentable area and communicate the result to our client.
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(3) |
If there appears to be insufficient demand to support the development at the subject location we can, if required by our client, research other locations and plot them on the study area map. We then utilise our GIS to model the impact of a new building at those locations on existing and proposed competitors, to determine if sufficient demand exists to warrant development. Then our results are communicated to our client. |
Click here for our Economic Intelligence Unit products video, or review actual Trade Area Analysis case studies.
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