Step 1: Location Analysis and Subject Site Productivity



Market Analysis for Quarry Square Shopping Center

Group 2 Steps 1&2

Five Student Group

FNCE5534

This report is intended to perform a market analysis for the subject site, Quarry Square (196 E. Main Street, Milford, MA 01757), a community shopping center in the Worcester, MA submarket. The analysis is done using the methods demonstrated in Ling Archer, Ch 6 as well as the Fanning text.

Step 1: Location Analysis and Subject Site Productivity

This step is performed without using CoStar. The source of information is Google StreetView, Google Map, Google Earth, Bing Map, physical site visits and other internet sources.

Location map, access to the interstate & visibility from major roads

• The SS is close to interstate I-495 (Exhibit 1.1)

▪ Access to I-495 through Route 109, extending the boundary of trade area.

▪ Approximately 1 mile to interstate

▪ Bounded by Route 85, Route 109, and I-495.

• The SS can be reached

▪ from Quarry Drive to the rear (Exhibit 1.1)

▪ from Route 16/E. Main to the front

▪ There are competitors along Fortune Boulevard up the north that may draw customers who come from the north side.

• Visibility from Route 16

▪ High ground base blocks the view from Route 16 (Exhibit 1.2).

▪ The Ninety-Nine restaurant has good visibility from Route 16, located at the south-west corner of the site and closest to Route 16 (Exhibit 1.2)

▪ The space vacated by Strawberries has great visibility from Route 16 (Exhibit 1.3).

▪ Stop&Shop is visible.

▪ A tree line running from the south entrance to the north reduces TJ Maxx visibility.

▪ Other tenants do not have good visibility from Route 16 since they are located far inside. Visibility is blocked by both cars parking close to the road and the high ground of the site (Exhibit 1.2).

▪ The listing sign of tenants is highly visible from Route 16 but include only 4 tenants: HomeGoods, Super & Shop, TJ Maxx and Citizens Bank (Exhibit 1.4).

• Visibility from Quarry Drive

▪ Only visible from the end of Quarry Drive (Exhibit 1.5).

▪ The listing sign on Quarry Drive contains more tenants, but not all (Exhibit 1.4).

▪ Lighting on Quarry Drive is poor

• Visibility from Prairies road

▪ Blocked by bunches of tree (Exhibit 1.6)

Linkages to other land uses

Quarry Square (SS) is referred to as a “Community Center” with features:

• convenient shopping oriented

• general line of merchandise

Trade area and driving (Fanning (Exhibit 12.2 – 12.3)) for “Community Shopping Centers”:

• Primary trade area: 5-20 minute driving time (60-70% of customers)

• Secondary: 20-35 minutes (15-20% of customers)

• Tertiary: not reflected in time (5-10% of customers)

Linkages to other land use from SS:

• Great overall potential

• I-495 0.7 miles away

• SS on 16 (E. Main St)

• Near intersection of 16 and 109 & 16 and 85

• 109 will bring traffic from the east

• 16 will bring traffic from the northeast and west

• 85 brings traffic from the north

• I-495 brings traffic from the north and south

• Milford pond is to the west of SS (1 mile away), but is only 200 feet in length and there are plenty of roadways around the pond for traffic to get to SS.

• There appear to be ample residential housing around the SS (esp. to the west).

• Even though there appear to be some “hilly” terrain to the northeast, I-495 bisects this so it is passable and would not hinder travel.

Overall, we see no real limitations for accessing the site from the area community. In fact, except for visibility from the road, the site has ample access. There is a lot of residential within 5 miles which may use the SS.

Geography:

Land area of Milford: 14.87 sq miles

Bordered by:

• Hopkinton to the north

• Holliston to the northeast

• Medway to the east

• Bellingham to the south

• Hopedale to the southwest

• Upton to the west

(source: )

Town lines within 5 miles of SS (all other towns are more than 5 miles away):

• Holliston to the northeast

• Medway to the east

Besides customers coming in on I-495, most of the customers within 5 miles will either live or work in Milford, MA and we will concentrate on the demographics of that town. The area within 5 miles to the northeast and east (the towns of Holliston and Medway) of the SS is sparsely populated (Google Maps) due to land conservation (Rocky Woods) and we don’t anticipate an abundance of consumers from those areas.

Largest employers in Milford:

• Benjamin Moore Painting (distribution center) – 1.6 miles from SS

• Saint-Goubain Containers (container manufacturer) – 2.2 miles from SS

• Milford Regional Medical Center (hospital) – 2.1 miles from SS

• Waters Corp (manufacturer of medical equipment) – 1.8 miles from SS

Population:

• 2010 Milford population: 24,383

• Milford Population growth (2000-2009): 0.57%

• Population growth for Worcester county: 7.2%

• 2009 MA population 6,593,587

• MA % growth (2000-2009): 3.9%

• USA growth (2000-2009): 9.1%

Population growth in Milford is much lower than the Worcester county average. This is negative because Fanning states it is desirable to position real estate in the path of development. Although population growth in Worcester county is much higher than the State of MA, MA is slow growing compared to the country.

(source: , )

Housing:

• Total Housing Units in Milford, MA: 10,713

• Owner-occupied: 6,744 (64.7%)

• Renter-occupied: 3,676 (35.3%)

• Number single units: 5,710

• Owner occupied housing units 6,744

• Median Home Value (Milford): $236,810

• Median home value Worcester County: $192,260

• Median home value in MA overall: $288,780

• Milford Households (2000) 10,713

• Milford Median Household Income $50,856

• Total Income (HH x MHI) $544,820,328

• Median household income in MA (2009): $64,057

• Median household income in Worcester county (2009): $62,885

Subsidized housing in Milford:

• Percent of homes subsidized: 6.8%

• Ranking in MA: 126 (out of 351)

Median home value in Milford is higher than in Worcester County. But, with median household income in Milford at $50,856, we have a less affluent submarket when compared to both the county and the state. Milford is in the lower half of the state as far as subsidized housing goes.

(source: and , )

Per Capita Personal Income:

• MA (2009): $59,732 (#3 most affluent in country)

• Milford: $29,970

• USA: $49,945

Milford is not an affluent community as compared to MA as a whole, but MA is affluent compared to the country.

(source: , , )

Education:

• High school graduate or higher: 15,494 (83.9% of town’s population)

• Bachelor’s degree or higher: 4,929 (26.7% of town’s population)

(source: )

Bachelor degree or higher:

MA as whole: 42.6%

Milford: 26.7%

(source: )

We have a less educated submarket when compared to MA as a whole.

Crime: (2009 crime rate per 100,000 residents)

Worcester county:

• Violent crimes reported: 1,003

• Property crime reported: 3,749

Milford:

• Violent crimes reported: 218

• Property crime reported: 1,123

(source: , )

Conclusion:

The success of retail in this submarket depends on appealing to mid to lower income population with a concentration on those who work in the area as well as residences within 5 miles of SS. The fact that population is not growing (based on historic data) and that this is not an affluent area, I would think that “staples” would work best here (supermarkets, cell phone stores, discount clothing) but not higher end merchandise or stores that cater to niche markets.

Traffic on Nearby Street

Subject Site (SS) is located on the North side of Route 16 and the South side of Fortune Blvd. via Quarry Rd. The roads offer entrance from each of the ends of the SS. I-495 is also approximately 1 mile from the SS. A Google search using catch phrases like “MA traffic counts”, “MA major roads”, and “MA traffic” revealed the following data for bordering streets.

Route 16 (East Main Street)

• According to MassDOT daily traffic counts east of Hamilton Street along Rt. 16 were 22,700 back in 1999 (0.25 miles from subject). MassDOT East Main Street to have traffic counts of 21,600, 26,400, and 24,300 in 1999, 2002, and 2005 respectively. No other data is available on MassDOT.

• Traffic along Route 16 averages 23,750. According to MassDOT there are currently no major plans to do any major construction along this roadway in the near future. Population growth has average 2% of the last 10 years and is expected to continue to grow at such a rate. Since Rt. 16 is a major roadway in Milford it is expected that traffic counts will remain stable or experience minimal growth in the near future.

Fortune Blvd.

• No ADT data on Fortune Blvd. was found; however, data on Cedar street, a similar road intersecting with Fortune just north of the subject, was available. ADT counts were 6,800, 8,700, and 10,400 in 1999, 2002, and 2005 respectively.

I-495

• More data is available on 1-495 traffic counts near the SS but only up to 2007. From 1998 to 2007 daily traffic counts have averaged 77,502. Traffic counts were 80,301, 79,930, and 79,989 in 2005, 2006, and 2007 respectively.

• The SS is located just off of 1-495 and is surrounded by other large retail stores that attract potential customers. Traffic counts have been stable around 80,000 based on the available data, which bodes well for the SS.

(source: )

Revenue stream from stop-off traffic:

Route 16 is the major roadway boarding the subject and will provide the most stop-off traffic. Using ADT of 23,750, a 1% stop rate, and an average spending or $10 yields average daily revenue of $2,375 or yearly revenue of $866,875. This seems low for the size of the SS and may be a red flag. Perhaps the stop percentage is higher or the average amount spent by consumers is higher, but more due diligence in subsequent steps should be done.

Structural Characteristics Such as Size, Age and Condition

General Age & Size Characteristics

• Year Built: 1987

• Building Size: 196,954 SF

• Gross Leasable Area: 196,954 SF

• Lot Size: Approximately 25 Acres

• Current Available Space: 32,680 sq. ft. as of 2/6/2011

• Minimum Divisible Rentable Space: 1,980 SF

• Maximum Contiguous Rentable Space: 20,000 SF

• Complex consists of 2 main opposing buildings. (See Exhibit 1.7)

▪ The eastern building contains Super Stop & Shop, HomeGoods and TJ Maxx.

▪ The Western building contains Gold's Gym in addition to a variety of smaller stores (List of tentants in Exhibit 1.9)

▪ There is one developed pad site containing a restaurant/bar.

▪ Additional Pad sites designated for future development (referenced in more detail in “Lot Dimensions, Ingress/Egress & Parking” section).

Condition of Property:

• The property has held up well overall and appears to be adequately maintained

• Site visits reveal structure of building is in good shape.

▪ Roof appears healthy

▪ No sign of issues on walls or windows

▪ Sign posts and walls show little sign of fading paint

• Parking lot is in good condition

▪ Lines appear to have been painted recently

▪ Light posts also appear to have fresh paint

▪ Curbs and crosswalks are clearly marked, as are fire zones

▪ Cracks look sealed and there is no sign of major potholes

• Lighting is adequate and property feels safe

• Landscaping appears to be pleasant without being overbearing

• Snow removal efforts look adequate to not block too many parking spots

• There are, however, some areas where improvements can be made

▪ Main signpost on Rt. 16 still shows “Season’s Greetings” as of Feb 13th. Gives impression that owner is not active in keeping up with seasonal retail needs.

▪ Vacant storefronts still show remnants of old signs, and require a cleaning and repainting.

▪ Stop & Shop/TJ Maxx half of property appears to be somewhat better preserved than the opposite building

Conclusion:

The building is in very good condition given that it is nearly 25 years old. The owner appears to have put in the effort necessary to ensure that shoppers have a safe and enjoyable shopping experience. Safety is addressed in the parking lot with proper painting, and adequate lighting in the evening also give a sense of safety.

The owner could take a few steps to freshen up the property to improve the appearance. Notably, there are still signs from the Holidays, as well as remnants of a sign on a vacant storefront.

Lot Dimensions, Ingress/Egress & Parking

Lot Dimension:

• The Lot is rectangular in shape (Exhibit 1.7)

• Lot size is 25.38 acres according to the Milford, MA tax assessor’s records (Exhibit 1.8)

• The property is segmented into two parallel rectangular buildings approximately 155,675 SF (Stop & Shop, TJ Maxx and Home Goods) and 57,200 SF in size (TD Bank, Gold Gym and 18 other tenants)

• The property also has two proposed pad sites available for development which are approximately 20,000 SF and 5,200 SF in size

• Finished area is 212,875 SF according to tax assessor’s records

196,954 SF is rentable space (gross leasable area) according to owner (Source: )

• Both buildings are set perpendicular to Route 16 and Fortune Blvd

Ingress/Egress:

• SS can be accessed from Route 16 and Quarry Drive via Fortune Blvd

• Route 16 offers two separate entrances to the SS from the south side that are approximately 100 ft. apart separated by the 99 Restaurant

▪ Both entrances offer excellent access to 99 Restaurant and Stop & Shop

▪ There are no traffic lights, center median or turning lanes controlling traffic on Route 16 in front of either entrance to the SS, however, this does not hinder access

• Quarry Drive (approx 2,000 ft long) entrance on the north side of the property can only be accessed from Fortune Blvd.

▪ Quarry Drive acts as a connecting road between the SS and Fortune Blvd and dead ends into the SS

▪ A traffic light on Fortune Blvd offers access to the beginning of Quarry Drive. No visibility of SS from this intersection.

▪ Signage is the only way to tell that the SS is accessible from Fortune Blvd via Quarry Drive

▪ Quarry Drive offers excellent access to the SS, however, visibility of SS is only good at the end of Quarry Drive

▪ Fortune Blvd is a major road which offers excellent access to other competitive retail stores, such as Target and TGIF, but offers poor visibility to SS

• The west side of the property is densely packed with trees and acts as a buffer from a residential area, offers no access to the SS

• The east end of the property acts as a loading area for Stop & Shop, Home Goods and TJ Maxx, offers no access to the SS

Parking:

• Adequate parking is available that meets town and industry standards

▪ Approximately 2,000 available parking spots based on count from site plan (Exhibit 1.7)

▪ Meets city of Milford, MA zoning regulation of 5 spaces per 1,000 sq ft per Gross Floor Area

Source:

Conclusion:

The lot is large and open enough to provide not only adequate levels or parking for the SS, but also allows for future expansion. The two undeveloped pad sites can easily be developed without detracting from the property or significantly decreasing access to sufficient parking. The entrances to the property allow smooth access to the site and do not hinder customer access. However, the lack of visibility of the SS from the Fortune Boulevard access point may contribute to potential customers not being aware of the subject sites existence.

Legal Characteristics

• Milford, MA uses a split tax structure

▪ Residential property is taxed at $15.22 per $1000

▪ Commercial Property is taxed at a much higher $26.06

▪ This high tax burden on commercial property owners can negatively impact profit on a large property such as this SS.

• Broad examination of bylaws does not reveal any regulations that appear on the surface to be a major detriment to the property.

Step 2: Determine the geographic and trade area of the subject site

This step is performed using CoStar

Identify major transportation Routes:

• CoStar map confirms:

▪ The SS is within 1 mile of I-495

▪ Route 16 borders and provides direct access to SS

▪ Both Route 109 and Route 85 connect to Route 16 and offer secondary access to SS

Measure the size and shape of trade area

• Quarry Square is classified as a Community Shopping Center based on meeting the following criteria:

▪ SS has 212,875 Sq Ft of GLA (meets Fanning’s range of 100,000 to 300,000 Sq Ft of GLA for category)

▪ SS has 25.38 acres (meets Fanning’s range of 10 to 30 acres)

▪ SS has a Stop & Shop, TJ Maxx, Dry Cleaners, Nail Salon (meets Fanning’s store mix of selling personal services, convenience goods and shopper goods)

• Based on Fanning’s Community Shopping Center definition the trade area:

▪ Has a 3 to 6 mile range

▪ 5 – 20 minute customer driving time

▪ 40,000 – 150,000 potential customers

Use CoStar to map trade area of SS:

• Basic Level Search – Radius

▪ Step 1 - Basic Information (Exhibit 2.1)

▪ Select Shopping Center Search

▪ Under Criteria select the Community check box

▪ Enter 175,000 to 250,000 as the Center GLA

▪ Step 2 - Location

▪ Select Radius as a geographic method to narrow search (Exhibit 2.2)

▪ Step 3 - Detail

▪ Enter SS address into location and enter 6 miles for radius

• Radius is determined using Fanning’s definition of customer travel distance for a Community shopping center (Exhibit 2.3)

▪ Zoom in one level to get a closer look at nearby streets and major thoroughfares (Exhibit 2.4)

• Adjust for Geographic Barriers

▪ Elongate sections of the trade area adjusting for roads and geographic barriers. Also adjust for area for water, mountains and similar geographical barriers

▪ Selected map/aerial search under location tab (Exhibit 2.5)

▪ Used location field and zoom to find SS and clicked ‘boundary search’ (Exhibit 2.6)

▪ Drew TA adjusting for Geographic Barriers (Exhibit 2.7)

▪ Heavier population and a faster travel time to the SS justifies elongated TA along I-495

▪ Low population, Upton State Forest, and limited roadways east of SS justify an inward adjustment.

▪ Roadways and denser population near Franklin (southeast of subject) justify an outward shift to TA.

▪ TA has been adjusted for Whitehall Reservoir and Hopkinton State Park.

Drive time distances

• CoStar does not provide driving times, nor do we have access to ESRI software.

• Using the following rule of thumb of 30 miles per hour on secondary roads and 60 miles per hour for interstates the following drive times were derived (times were verified using the direction function on ):

▪ 8 minutes from Woodville – approximately 10 miles north of SS off of I-495

▪ 19 minutes from Gooch Corners – approximately 9 miles northeast of SS

▪ 10 minutes from Franklin – approximately 9 miles southeast of SS

▪ 19 minutes from Wadsworth – approximately 9 miles south of SS

▪ 15 minutes from Wheelockville – approximately 7 miles southwest of SS

▪ 18 minutes from Kittville – approximately 9 miles northwest of SS

Research did not reveal any construction sites or congestion issues that would hinder travel within the subject TA.

At this point in the analysis we do not have CoStar data on competitors located within the TA to justify whether or not consumers will drive this far to the SS; however, based on research we have done it appears that these drive times are reasonable for this market.

Exhibit 1.1: Location map

Source: maps.

Address: 196 E Main St, Milford, MA 01757

Zooming-out view: close to interstate I-495

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Zooming-in view:

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Exhibit 1.2

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Exhibit 1.3

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Exhibit 1.4

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Exhibit 1.5

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Exhibit 1.6

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Exhibit 1.7

Quarry Square Site Map

Source:

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Exhibit 1.8

Property Tax Cards: (Source: )

|Location  196 EAST MAIN ST |Property Account Number   |Parcel ID  32-98-17C |

|Old Parcel ID  FY98ADD -33-98-B -32-98-17AA |

|Current Property Mailing Address |

|Owner |

| FAFARD MADLYN A |

|City |

| MILFORD |

| |

| |

| + TERRILL RICHARD E TR |

|State |

| MA |

| |

|Address |

| 120 QUARRY DR-2NDFL. |

|Zip |

| 01757 |

| |

| |

|  |

|Zoning |

| IB |

| |

| |

| |

|Current Property Sales Information |

| |

|Sale Date |

| 5/9/1990 |

|Legal Reference |

| 12774 127 |

| |

|Sale Price |

| 0 |

|Grantor(Seller) |

| FAFARD HOWARD A |

| |

| |

| |

| |

| |

|Current Property Assessment |

| |

|  |

|  |

|Card 1 Value |

|Total Parcel Value |

| |

|Year |

| 2011 |

|Building Value |

| 7,964,300 |

|Building Value |

| 12,016,900 |

| |

|  |

|  |

|Xtra Features Value |

| 276,700 |

|Xtra Features Value |

| 289,100 |

| |

|Land Area |

| 25.380 acres |

|Land Value |

| 6,756,000 |

|Land Value |

| 6,756,000 |

| |

|  |

|  |

|Total Value |

| 14,997,000 |

|Total Value |

| 19,062,000 |

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|Narrative Description |

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|This property contains 25.380 acres of land mainly classified as SHOPCTR with a(n) SHOP CTR COM style building, built about 1986 , having |

|CONC BLOCK exterior and MEMBRANE roof cover, with 4 unit(s), 0 total room(s), 0 total bedroom(s), 0 total bath(s), 12 total half bath(s), 0|

|total 3/4 bath(s). |

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|Legal Description |

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|Property Images |

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|[pic] |

|[pic] |

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Exhibit 1.9 – List of Tenants as of February 12, 2011:

TD Bank

Spotless Cleaners

H&R Block

Bronx Bagels

Cartridge World

Optical Shoppe

Gourmet Pizza

Mandarin Restaurant

Edible Arrangements

Children’s Orchard

Before and After Hair Salon

Cosmo Professionals

L.A. Nails

Baza Jewelers

Chm Thai Café

Gold’s Gym

Performance Nutrition

Hickey Liquors

HomeGoods

Stop & Shop

TJ Maxx

99 Restaurant

Exhibit 2.3 – CoStar Shopping Center Search – Step 3 Detail

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Exhibit 2.4 – CoStar Shopping Center Search – Step 3 Detail with Zoom

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Exhibit 2.7 – CoStar TA area adjusting for geographic barriers – Drawing

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