Rural areas provide a runway to new customers, but retailers and owners must evaluate the challenges to own, manage and lease effectively, comment industry leaders including Coreland’s Tanya Keshishian.
By Paul Bergeron | March 22, 2023 | As published by ICSC C+CT
For national retailers that have saturated urban areas or that struggle to find available space to lease, rural areas provide runway to new consumers. “The economics are often better on real estate in rural areas,” said Lisa Christianson, president and owner of Christianson & Company Commercial Real Estate Services/CORFAC International in Minneapolis.
“There are clear opportunities to provide goods and services to underserved populations, as well as to consolidate market share in areas often overlooked by many retail operators,” said Greensfelder Commercial Real Estate managing principal David Greensfelder. “Furthermore, being first to market in a rural area can create a de facto barrier to entry to competitors, meaning that downside risk from future competitors can be less than might be expected in more populous areas. From an operational perspective, grosses can be more robust in exurban than in more competitive markets and operating economics can also be more favorable.”
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Demographics and a Community’s Real Story
“Rural areas don’t always have the access to data that a larger city might have,” said broker Justin DiBiase, vice president for Western Retail Advisors. “That makes it challenging to show a retailer why they should be there. In the same vein, outdated demographics, traffic counts or gross receipts tax information could deter potential retailers from wanting to invest in the community.”
Basic demographic data might indicate 40,000 residents in a particular area, in which case Walmart, for example, likely wouldn’t categorize it as a top pick for development. But if Walmart conducted its own analysis, it might find an additional 150,000 residents from surrounding areas that rely on the community for services, upping the location’s appeal. DiBiase said data from providers like Placer.ai, Locate.ai and Esri can help put a community in context. “A clear vision of a community’s story goes a long way toward attracting retailers.”
Coreland Cos. vice president of real estate management Tanya Keshishian said such an understanding of the physical real estate — including its location, customers, surrounding community and traffic patterns — aids her asset management work, as well. She recommended drone photography when not able to visit a location often. It can provide a detailed and nearly live reference point when sitting down with owners, asset managers or property managers to review issues or potential improvements that would appeal to tenants, Keshishian said.
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