Compare Retail Portfolios

This example illustrates the importance of Location Quality to the overall value of a real estate portfolio as measured in this case by store performance. Higher quality sites produce higher sales performance and result in increase value for the overall portfolio.

For this example we have take all of the stores for several major retail chains and divided them in to three portfolios:

  • High Scoring Retail Locations
  • Average Scoring Retail Locations
  • Low Scoring Retail Locations

We then computed the average sales for the three portfolios. The table below has the results. As you can see, location quality has a profound impact on sales performance for these chains.*

How Location Quality Impacts Sales Performance for Four Retail Chains
# Stores Low Location Quality Medium Location Quality High Location Quality
Household Goods Chain 343 $1,300,000 $1,456,000 $1,754,000
Grocery Chain 278 $7,120,000 $8,224,000 $9,684,000
Fast Food Chain 960 $750,000 $967,000 $1,260,000
Casual Theme Chain 126 $1,600,000 $1,956,000 $2,384,000

* In these examples Location Quality represents a weighted sum of location attributes such as Neighborhood Demographics, Employment Data, Local Site Features, Traffic and other location factors. A sales forecasting model would use these data plus many other non-location factors to predict store performance.