Matching a tenant to a commercial space is a challenging endeavor on both sides. The landlord is typically making an uncertain long-term commitment to the business, and in turn the business is taking the risk of being able to cover their rent payments over the life of the lease.

The value of a space is oftentimes driven by its location. In many areas, you can take a drive or walk by and get a feel for an area. What other businesses do you see operating? Who tends to be walking the streets? While helpful as a start, it’s a limited sample at a point in time and misses the bigger picture — how does the area compare to other options?

Data has historically been aggregated to common recognized geographies for analysis as a means to showcase a location. We intuitively understand a city or zip code. These areas are large, though, and for tenants making decisions on expensive long-term lease commitments, more conviction in the surrounding area can help drive better decisions.

Today, we can go beyond traditional zip code or city boundaries, but still develop intuitive data tools to help businesses make these critical decisions. We can ask questions like “How many people live within a 15-minute walk of a property? What is their demographic composition?” or “What other types of businesses operate close by?”.

I’m fortunate to live in an area experiencing rapid development and growth. Every day, I walk by buildings at various stages of development. I noticed the developer of one building put up a post on LinkedIn searching for commercial tenants to occupy the ground floor of a mixed use development.

I wondered — who’s a good fit for the property? I generally know the area, but what data could I pull in to bring to light new opportunities or insights to inform this?

Disclaimer: This does not consider the limitations of permitting, cost of space, building restrictions, or other relevant pieces of information. It’s simply an analytics framework for identifying a property’s value to prospective tenants.

The Neighborhood

Here are a couple baseline pieces of information to know about the neighborhood, Glenwood South:

• It’s positioned in close proximity to downtown Raleigh with rapid growth in development of large luxury apartment buildings

• Its recent reputation is as a party neighborhood with clubs and bars scattered throughout the small area

• A shift over the coming 3–5 years toward a more upscale area appears likely given recent development, permit applications, and price appreciation

It’s highly walkable and has multiple universities within walking distance, in addition to high-end office space and numerous bars & restaurants.

The Property

The new development is positioned at the north end of Glenwood South on a fairly high traffic road. It’s located right in the middle of mixed residential and commercial areas with universities, high schools, and elementary schools in nearby walking distance, in addition to highway access (marked by yellow in the below map; it’s not quite a highway, but not a regular street either).

Given the property’s location and surrounding area, my perspective is that it will benefit most from foot traffic with a secondary (though still quite valuable) benefit of being on a high-visibility street. I suspect that — like many urban locations — there will be limited parking availability, restricting the number of cars that could visit at a given time.

So, knowing the above, this leads us to ask…how many people live within walking distance to the location, and what is their demographic composition? What other businesses surround the location that could benefit — or hold back — a certain type of tenant?

The Analytics

Here’s where it gets interesting — at least if you’re an analytics nerd like me.

Let’s assume in an urban area someone will walk up to 20 minutes to a location. Here’s what a 20-minute walking radius looks like on a map. Given this radius, what do we know about the activity happening in that area?

The data suggests a population of ~10,500 people and ~25,000 jobs within that walk time. I’d estimate both of those are higher today given the lag between data reporting and present day. These numbers are significantly higher than county benchmarks, suggesting this is a dense mixed use area (“live-work-play” as the saying goes).

Of those living within a 20-minute walk, about 50% are between 18 and 34 (compared to 24% in the county) and 40% of the jobs are office jobs (compared to 30% in the county), meaning “young professionals” is likely an appropriate characterization of the population.

Between the population and office jobs, there are enough people within a 20-minute walk to fill the local NHL arena every day

The area is highly walkable, having a score of ~85 out of 100 with a typical household income of ~$73,000. The household income is lower than the county average, however, the typical household size is also smaller, suggesting the money available to spend is higher per person.

There are about 100 establishments licensed to serve food within the walking radius, most of them to the south as the area immediately north is residential.

There are ~16 apartment complexes considered “luxury” within the walking area— not to mention additional condo buildings — and multiple plots of land on the same block that, as a bonus, may be developed within the length of time that a lease would run.

Lastly, car traffic data from the state of North Carolina suggests that about 11,500 cars travel by this location on a given day. This is from 2020 and is impacted by COVID, so again, my perspective is that this has materially increased today.

What it Means

So, bringing together the above, we can say that the area is highly walkable and urban with a young, affluent, growing surrounding population. It likely has an addressable market of at least 40,000 people per day between car traffic, local population, and nearby jobs (or, to put it in terms a local can appreciate, enough to fill nearby UNC Chapel Hill’s basketball stadium 2 times).

The highest value solution is a business that will benefit from (1) The surrounding area population and workers; (2) The parents that drop off / pick up their children at (very) nearby elementary schools and (3) The 2,000+ students that go to the high school within close walking distance.

What types of businesses could benefit from this target audience and market size?

There’s been fierce competition in the Triangle by banks looking for market share, so a relatively low capital tenant (compared to, say, having to build out a commercial kitchen) may be a bank looking for a high-visibility branch. They’d reach a young, high-income client base by foot plus the implicit branding from passing road traffic.

There may be opportunity for a high-end fitness boutique, but an additional point of consideration would be that all of the luxury apartment buildings will have gyms — as will some of the office buildings — so the addressable market may be smaller than expected among the walking-distance population/workers.

A bar or restaurant/quick service restaurant (QSR) is a possibility, though as shown on the map, many already exist, and more are in the plans as a part of new developments within close walking proximity, so it would need to be a unique concept not already captured within the broader area.

A pharmacy like CVS or Walgreens may be in play depending on the size of the space as both have locations about a mile away, which in an urban environment can miss out on market opportunity for people that want immediate convenience.

A final thought I’ll mention — which is admittedly a long shot / very low probability but I think has high value — would be something like an Amazon Go store. Its value spans age groups and it would benefit from the mixed use driving traffic passing by. The location is centrally located for foot traffic to pick up packages or to use as a micro distribution hub. In addition to everything discussed about walking accessibility, a business could also reach ~120,000 population with a 10-minute drive, unlocking further value. Its quick in-and-out format would be conducive to the (likely) low available parking.

This is just an illustrative example of the capabilities available with modern data tools & resources. We picked walking time because it was relevant to the location, but any driving time or radial distance (i.e. 2-mile circle) are also options. Restaurants were cited because they’re a common use of space, but it could be just as easily subbed out for dental offices or physicians if a healthcare client was the target audience.

Today, data can bring more conviction to decisions by adding an additional layer to the local market knowledge and expertise that a commercial real estate agent brings to the table. Finding the right location is never easy, but increased data access with relevant, targeted information can be a significant value-add in the decision.