Foot traffic plays a significant role in the retail sector of commercial real estate. Typically, the more foot traffic you get, the greater your revenue.
What is Foot Traffic in Retail?
In retail, foot traffic is the number of people who enter your shop over time. Foot traffic can be measured by the hour, day, or longer periods of time. Analyzing the data helps retail store owners to understand specific customer trends.
Foot traffic can be determined using digital methods, such as cameras and tracking software, or manual methods like counters.
It can also be quantified by capturing mobility data from mobile networks.
Why Monitor Foot Traffic?
There are many reasons CRE investors and brokers should want to understand footfall, including:
Making Better Investment Decisions
Many of the decisions commercial real estate investors need to make, have high stakes. It’s important that decisions about purchasing and leasing retail properties are backed by research and data.
Areas with high foot traffic counts are often more attractive to retail tenants as they yield higher profits. In turn, properties in these areas might provide a better return on investment for the investor.
Calculating Accurate Property Valuations
What is foot traffic's impact on property valuations? Higher foot traffic usually correlates with higher property values.
It’s an important metric for brokers and investors to consider during the property valuation phase and can be a key factor in determining the overall value of a property.
Finding and Keeping Good Tenants
A good understanding of foot traffic patterns in a retail location, helps a property owner to create a complementary mix of tenants. Successful retail tenants are more likely to stick around for the long haul.
You can even use foot traffic data as a bargaining chip during a lease negotiation. For example, a property owner might use high foot traffic counts to justify a higher rental.
Identifying Potential Issues Early
Changes in foot traffic can be a strong indicator of a potential issue in an area. For example, a new competitor store, or the closing of a nearby train station could lead to a decline in customers.
What is foot traffic data telling you in these situations? It’s a clear signal that it’s time to adjust your retail strategy to counteract any negative effects these changes might present.
Conclusion
In today's highly competitive and constantly evolving retail landscape, staying informed about foot traffic and using data-backed strategies is key to maintaining a thriving brick-and-mortar store. If you have any questions regarding foot traffic or general commercial real estate questions, contact Think Real Estate Benefits advisors today!
(619) 251 - 1088 | Info@Think.realestaate | CA BRE# 00993287
Source: AlphaMap. “What Is Foot Traffic? The Ultimate Guide for CRE Brokers and Investors.” AlphaMap, www.alphamap.com/blog/what-is-foot-traffic. Accessed 19 Aug. 2024.
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