Employment growth in total market area: 5,000 over the next 4 years
PE ratio: 2.75
Average household income: $40,000
Percentage of spending: 30% taxes; 42% nonretail; 5%
savings; balance retail
Average household size: 3.10 persons
Average sales PSF: $235
Primary market leakage: 24% (Compute the leakage on the sf of
primary retail space needed)
Primary market capture: 10% of primary retail sf (Do not apply the
leakage to the secondary)
Frictional vacancy: 7%
Proposed supply in market: 93% current occupancy; 210,000 sf proposed
1. What is the projected growth in population per year in the market?
2. What is the projected growth in total households over the next 4 years?
3. How much total space in the market area will be demanded as a result of the total growth in this market area before frictional vacancy?
4. What is the residual demand for retail over the next 4 years in this market?
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Answers:
1. 5,000 x 2.75 / 4 = 3,438
2. 5,000 x 2.75 / 3.10 = 4,435
3. 4,435 (households) x $40,000 x (1-30%-42%-5%) / $235=173,626 sf
4. 173,626 / (1-7%) = 186,694 need if no leakage
186,694 x (1-24%)=141,887 sf need with leakage
141,887 sf x 1.10=156,076 sf needed with secondary capture.
There is 210,000 sf proposed, the market is currently in balance, and therefore, no additional space will be needed.
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