How to Define a Retail Trade Area and an Office and Multifamily Market Area in a Small Town

<p>The School of Government’s Development Finance Initiative (DFI) was founded in part to provide specialized assistance to help small towns in North Carolina attract private investment and spur revitalization efforts. A key part of DFI’s process is to evaluate the type and scale of development that the local market could support.  A foundational first step in this analysis is to define the limits of the market, or in more technical terms, the retail trade area and residential and office market areas. Where could a potential development draw demand from and what other properties is it competing with? Commercial real estate databases and national-scale brokerage firms will often outline their own trade areas for large communities. However, small communities that haven’t had recent developments may have never had their trade area defined. Though not an exact science – two market analysts will often define a trade area differently — the ability to articulate and justify a trade area can help a small community win interest from developers who may otherwise be unfamiliar with a community’s development potential.</p> <p>A developer seeking real estate development opportunities in an unfamiliar or untested market will want to understand the market potential of a site they are considering purchasing. For example, developers may consider:</p> Existing Supply – the quantity, quality, and types of properties that already exist in the market as well as any properties in the development pipeline. This information helps a developer understand their competition in a market and whether there is demand for new commercial space or multifamily [...]