If you’re a commercial real estate (CRE) developer, you’ll know that benchmarking your projects against industry standards and competitors can help to identify ways to improve and optimize performance.
The challenge today is that as CRE becomes increasingly data-driven, the sheer volume of available information is overwhelming and difficult to process without the right tools. This is where geographic information systems (GIS) technology can help.
Using a CRE-specific, GIS-based platform, like AlphaMap, significantly simplifies and supercharges the benchmarking process, by giving you access to comprehensive data analysis tools in one centralized platform.
In this guide, we’re delving into exactly how AlphaMap makes the steps of benchmarking easy – ensuring you don’t miss out on critical insights that might impact your projects’ success.
Understanding Benchmarking in Commercial Real Estate Development
A ‘benchmark’ is a point of reference against which something can be measured. In CRE, benchmarking is process of comparing a property’s performance against:
- Industry standards
- Competitors
- Historical data
The process of benchmarking ensures your properties continue to perform at the highest level, keeping you ahead of your competition.
Types of Benchmarking
Types of benchmarking relevant to CRE developers include:
- Internal benchmarking: Comparing a property's current performance against its own historical data. This is useful for measuring energy efficiency, operating costs, or even tenant satisfaction.
- Competitive benchmarking: Comparing a property's performance against direct competitors in the same market. Helpful for getting a feel for how your property ranks in the market compared to others of a similar size and type.
- Strategic benchmarking: Comparing a property's performance against industry leaders or best practices, even if they are not direct competitors.
- Location benchmarking: Comparing potential development sites against each other based on location-specific factors.
The Steps of Benchmarking with AlphaMap
1. Select a Benchmarking Subject
- Inside the AlphaMap platform, click on ‘Map Explorer’
- Type in the property’s address or pick a location or area on the map.
- You can type the address of a property you own, a competitor’s, or the location of a development site you have your eye on.
2. Choose Benchmarking Parameters
On the righthand side of the screen you can visualize your location with:
- Map pins: Showing key proximity locations by CRE sector and density
- Layers: View neighborhood and city boundaries, and roads; heatmaps showing population statistics and demographics both now and in the future; and zoning by CRE sector
- Custom area: Study specific areas around your location
On the lefthand side you can request:
- Parcel reports: View zoning and property records
- Area reports: Define trade areas based on distance or drive time study car traffic, and access detailed demographics
- Mobility reports: Analyze location and area visits, view real-time foot traffic statistics, see how locations rank against each other
- Create custom reports
Once you’ve selected your parameters, it’s time to make meaning of them.
3. Collect Data and Analyze
AlphaMap provides access to a wide range of location-based data. This eliminates the need for you to gather data from multiple sources and allows you to focus on the important parts – analysis!
AlphaMap can access real-time, accurate, and comprehensive data from a variety of reliable sources, including:
- Government agencies
- Commercial data providers
- Proprietary data collection methods
This ensures you have access to the most up-to-date and relevant information for your benchmarking and analysis needs.
Our collection of mapping tools includes heat maps, charts, and graphs, making visualizing and interpreting the data easy.
For example, you can use heat maps to find areas with high foot traffic or consumer spending hotspots and compare the demographic profiles of those locations.
Advanced features such as custom data analysis allows you to combine AlphaMap's data with your own proprietary data to create your own benchmarks.
Predictive modeling uses machine learning algorithms to forecast future trends based on past data. As a result, you can make decisions proactively.
Here’s some types of advanced analyses you can run using AlphaMap.
- Population & Demographics: With access to current and forecasted population demographics and consumer expenditure data, AlphaMap enables you to benchmark the demographic profiles of different locations.
This helps you understand the potential customer base and market demand in specific areas, facilitating benchmarking during site selection and analysis.
- Trade Area Analysis: By providing insights into population demographics, shopping behavior, and more, within a property's trade area, AlphaMap facilitates benchmarking against similar trade areas.
You can compare the characteristics and dynamics of different trade areas to identify trends, assess market demand, and benchmark the potential of different locations for investment or development.
- Foot Traffic Analysis: Our foot traffic analysis feature allows you to compare the foot traffic patterns of different locations over time.
By examining foot traffic visitation trends, average visit duration, capture rate, and customer retention, you can benchmark the attractiveness and performance of various sites for retail or commercial purposes. - Car Traffic Analysis: AlphaMap provides data on car traffic counts, including directional, daily, and hourly traffic counts.
You can use this information to benchmark the accessibility and visibility of potential sites based on the volume of car traffic passing by, which is particularly relevant for retail and commercial developments.
- Competitor Analysis: Our location rankings allow you to compare the performance of a property or brand against others within the same city, state, or across the nation.
This enables you to benchmark the performance of potential sites against similar properties or brands, helping you identify high-performing locations and make informed decisions.
5. Measure Current Performance Against Benchmarks
Once you’ve run several location analyses, you’ll be able to compare the performance of different locations against each other. AlphaMap’s ‘Rank’ feature is particularly helpful for this.
You could also run a void analysis using the TenantFinder™ feature. TenantFinder™ has been designed to help find ideal tenants but it’s also a powerful location analysis and market research tool.
6. Create and Implement a Plan (With Examples)
Craft a strategy based on the insights gleaned from your benchmarking process. Create realistic actionable goals and gain stakeholder buy-in before implementing. Some examples of insights gained, and plans created, could include:
Example 1: Trade Area Analysis
Upon studying a potential attractive site, a shopping mall developer discovers that it’s located in a trade area with a high concentration of low-income households.
They decide to adjust the tenant mix to cater for the preferences and pricing requirements of this demographic. Similarly, they also discover that the area has a high concentration of families with children.
The developer decides to add some family-friendly amenities, such as a playground, to the design of their mall.
Example 2: Foot Traffic Analysis
A retail center developer discovers that a potential site has low foot traffic during the mornings but higher traffic in the afternoons.
They decide to incorporate a gym into the retail center to attract more customers during the earlier hours of the day. They also add a restaurant and take-out joint to attract the people passing by in the afternoons on their way home from work.
Example 3: Competitor Analysis
A retail developer is considering a new shopping mall in a bustling suburb. They use AlphaMap's ‘Rank’ tool to assess the performance of similar shopping centers in the vicinity.
They discover that a nearby shopping center consistently outshines others. The rival center features some innovative architectural features and a well-matched tenant mix. Intrigued, the developer uses AlphaMap to explore the rival center’s strategies.
As a result of their investigations, the developer decided to incorporate some new features in the design such as an inviting open-air layout and a strong emphasis on experiential retail, into their own development plans.
7. Monitor and Adjust
Often forgotten but arguably the most important part of the benchmarking process is continuous monitoring and improvement. You’ll want to keep an eye on the effectiveness of the implemented changes. Are they achieving the results you were hoping for? If not, why not?
Make small adjustments if you need to or run further analyses to identify new strategies. It’s the iterative nature of benchmarking which contributes to real development growth.
Fortunately, running new trade area and foot traffic analyses with AlphaMap is quick and easy, minimizing your workload but still enabling you to keep up with the competition.
Navigating Challenges in Benchmarking
Typical challenges you might face during the benchmarking process includes:
- Limited access to accurate data
- Misinterpreting data
- Overreliance on outdated methods
- Resistance to change (if not yourself then among team members)
While convincing resistant team members to try out the latest GIS technology isn’t easy, we’ve been meticulous about ensuring AlphaMap is user-friendly and intuitive.
We focus on obtaining accurate data from large data samples, so that you don’t have to worry about whether the data you’re using is reliable.
If you’re ready to get started, we’d recommend implementing changes slowly across your organization. Our team can assist you with this integration process.
Final Thoughts on the Steps of Benchmarking with AlphaMap
If you’ve never tried benchmarking before, or you’ve found it difficult in the past, we hope we’ve convinced you that it’s incredibly simple to do with a GIS-based location insights tool, like AlphaMap. The platform's user-friendly interface, comprehensive data, and powerful analytical capabilities make the benchmarking process a cinch.
From identifying new potential development sites, optimizing your development strategy and tenant mixes, there’s simply so much you can investigate with AlphaMap. And so many exciting insights to uncover!
To get started with integrating AlphaMap into your benchmarking processes, book a demo with our team today.
