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What is Void Analysis?
Void analysis is the strategic process of analyzing geographical spaces to uncover gaps – or voids – in available goods and services. In the context of retail and commercial real estate (CRE), this analysis is used to evaluate a property and its surrounding trade area to identify the most suitable businesses to fill a vacancy.
This process is essential for CRE professionals seeking ideal tenants, developers planning new projects, and business owners scouting for the best locations to expand.
In the past, void analysis was a manual process of simply comparing a region to a reference area to spot "missing" retailers. Today, advanced location analytics tools allow professionals to base their analysis on a rich set of data points. By aggregating data from a wide variety of sources, modern tools synthesize demographic, psychographic, and visitation trends to ensure every decision is backed by hard data.
How Does Void Analysis Work?
To understand the mechanics of void analysis, imagine a group of asset managers tasked with filling a vacancy in an outdoor shopping center. While they trust their intuition, they need data to decide between a restaurant or an apparel store, or between a luxury chain and an off-price brand.
To make the right choice, they must analyze several key factors:
- Demographics and Psychographics: What are the habits of consumers in the center's true trade area (the specific census blocks visitors travel from)? Knowing which age and income groups frequent the center helps predict which new tenants they will embrace.
- Supply and Demand: Which local markets are oversaturated, and which are underserved? Is there an unmet need for electronics stores, or is the area already flooded with them?
- Category Performance: Which retail segments have performed well in this specific area over the last few years? Identifying categories poised for growth is key to long-term tenant stability.
- Co-Tenancy Patterns: Which chains frequently locate near the stores already operating in your center? Strong co-tenancy is a powerful indicator that a new business will thrive next to existing neighbors.
- Chain Track Records: How are potential tenants performing nationally? Are they in expansion mode or downsizing? Prioritize brands that are experiencing visit growth rather than those seeing declines.
- Cannibalization Risk: Does the potential tenant already operate nearby locations? Will a new opening drive net-new traffic, or simply siphon revenue from their existing stores?
- Venue Compatibility: Does the available space match the tenant’s typical store footprint? Ensuring the square footage aligns with their operational model helps maximize sales per square foot.
Many of these factors depend on accurate location intelligence at the market, chain, and point of interest (POI) level in order to inform decision-making.
3 Strategic Use Cases for Void Analysis
Beyond filling immediate vacancies, void analysis is a versatile tool for various CRE and retail scenarios.
- Conducting Data-Driven Negotiations
CRE professionals can use void analysis to strengthen their position during lease negotiations. If an asset manager identifies a specific specialty foods chain as a perfect fit, a properly conducted void analysis serves as evidence. It builds a data-driven case that proves why the venue is ideal for that specific tenant, helping to close deals faster.
- Smarter Site Selection
Retailers can use void analysis to identify properties where their business is most likely to thrive. For example, a high-end children’s apparel chain can scan multiple markets to uncover areas with high concentrations of their target demographic but low competition. This reveals where their white space truly lies.
- Property Development Planning
Developers use void analysis before a single brick is laid. By identifying high-demand industries in a region, firms can plan construction projects that are specifically tailored to the needs of the local community – ensuring high occupancy rates from day one.
The Placer.ai Void Analysis Solution
Collecting the data for a thorough void analysis – demographics, competitive landscape, and foot traffic trends – can be a daunting manual task.
Placer.ai streamlines this process by providing a dedicated Void Analysis tool. This solution allows users to:
- Instantly Synthesize Data: Layer demographic and psychographic data onto real-time foot traffic analytics.
- Rank Prospective Tenants: Generate a list of potential tenants for any property or vacant lot, ranked by a "Relative Fit Score."
- Customize the Search: Filter results by specific retail categories, chain sizes, or desired customer profiles.
Instead of sifting through spreadsheets of potential tenants, users can analyze a property’s trade area in seconds. The tool ranks candidates based on critical metrics like demographic fit, cannibalization risk, and average monthly visits, allowing for rapid, confident decision-making.
Key Takeaways
- Definition: Void analysis identifies gaps in goods and services within a specific trade area to find the best tenants for a vacancy.
- Modern Approach: Unlike manual comparisons of the past, modern void analysis uses mobile location data to assess true trade areas, not just simple radial distances.
- Risk Mitigation: By analyzing cannibalization risk and co-tenancy trends, landlords can avoid tenants that might funnel traffic from existing stores or fail to benefit from neighboring businesses.
- Strategic Value: It is not just for landlords; retailers use it for site selection, and developers use it to plan projects that match local demand.
- Efficiency: Tools like Placer.ai automate the aggregation of demographic and visitation data, turning weeks of research into instant, ranked lists of potential tenants.
Frequently Asked Questions (FAQ)
Q: What is the difference between a trade area and a void analysis?
A: A trade area analysis describes a location’s audience. Void analysis uses that trade area definition to determine which business would be a good fit.
Q: Can void analysis help with rent negotiations?
A: Yes. By presenting data that proves a specific location is perfectly suited for a tenant's demographic and has high unmet demand, landlords can justify higher rental rates and reduce vacancy periods.
Q: How does foot traffic data improve void analysis?
A: Traditional void analysis often relies on static census data that describes neighborhoods. Foot traffic data maps audience journeys, providing a more accurate picture of a center's true customer base and their dynamic behaviors.
