More Rules of Thumb & Benchmarks to Guide Retail Real Estate Planning

MORE RULES OF THUMB & BENCHMARKS FOR COMMERCIAL REAL ESTATE DEVELOPMENTS

I use rules of thumb and benchmarks to quickly access a site, plan, strategy, market research study, etc. They are meant to be challenged. and to prompt semi-informed questions.
 
US DEMOGRAPHIC OBSERVATIONS
Households and Income
Early 2025 US Projections
Households: 129,687,000
Average household income: $113,181
Median household income: $78,410.

RETAIL SALES OBSERVATIONS

1.     Retail Sales

In 2023 total retail sales were 7.2 trillion dollars including auto sales (i.e. auto parts and fuel).

2.     Retail Purchases as a % of Household Incomes

The average household typically spends 48-50% of its household income on combined retail purchases including grocery sales and auto related sales.

Non-auto retail sales are approximately 36%-38% of household incomes.

3.     GAFO Sales (i.e. general merchandise, apparel, furnishings, and other)

GAFO Sales once synonymous with traditional department stores sales were 30.7% of non-auto related retail sales in 2023.
 
SITE/SPACE PLANNING NOTES

1.     Parking That Works

 Diagonal parking is more shopper-friendly in suburban and town center settings than 900 spaces and 30 feet of street width is required between parking rows.

2. The Acreage Rule

 Suburban retail developments usually require 1 acre for every 10,000 square feet of retail space with parking and common areas. As an example, it takes 10-acres for 100,000 square feet of retail buildings with streets, sidewalks, parking, and landscape areas.

3. Keep It Rectangular

 Stores thrive in clean rectangular layouts for practicality and merchandising efficiency. It’s difficult to layout shelving efficiently in a trapezoid space.

4. Single-Sided Success?

 Single-sided strips of shops, like boardwalks and shops lining atriums, reduce shopper traffic and increase project costs per square foot as the full cost of public areas are allocated over half the retail space of a double loaded public area. Pick your view carefully.

5. What is an Anchor?

 Shopping center anchors, whether they’re flagship stores, grocers, major restaurants, food halls, entertainment venues, and even waterfronts drive foot traffic. Design and merchandise your retail project around the anchors to evenly distribute shopper flow.

6. Restrooms Are Critical

 Shopping Centers must have accessible, and well-maintained restrooms located in a visible location and not down back hallways.

7. Restaurant Areas

60% of a restaurant’s floor area is typically allocated to the dining area and the remaining 40% is allocated to the kitchen, food prep, storage, trash, and office. A fine dining restaurant may be more in the range of 50/50.

8. Restaurant Seating

I use a quick rule of thumb of 15 square feet per seat in the dining room of a typical restaurant and 20 square feet for fine dining and a larger back of the house). As an example, a 5,000 square foot fine dining restaurant could have a dining room of 2,500 square feet. 2,500/20=125 seats.