VOL. 130 | NO. 243 | Tuesday, December 15, 2015
Memphis Tech Firm Changing Real Estate Site Selection Process
By Madeline Faber
Considering how spread out Memphis is, most residents have to get behind the wheel to get to their destination. In reflecting the flux of a vibrant city, homegrown tech company Meridian Econometrics has developed a new commercial real estate site selection program that capitalizes on mobility.
Usually demographic and population data is assembled on a heat map, said John Hill, president and CEO of Meridian. He holds that this presentation is static and can lead to false conclusions.
Instead, his team designed a program that overlays a mobility radius – or how far people are willing to drive – on top of that geographic area, creating a multidimensional contour map.
“We want our visualization to show this is the number of people you can reach and not just this area kind of looks like it’s dense in the city,” said Daniel Bozeman, chief technology officer.
The True North program launched its public version last month.
While consulting with a coffee shop looking to move to Downtown Memphis, Meridian drew some conclusions about what has been holding Downtown back in terms of big retail development.
“Downtown just can’t compete,” Hill said. Downtown is unique because it’s on the edge of the city limits rather than the center of the city. A typical mobility radius for a company is around three miles. When TrueNorth draws that radius around a Downtown hub, half of the population isn’t accounted for because of the border of the Mississippi River.
Additionally, a lot of market research is based on traffic counts. Downtown doesn’t perform well in this area because it’s where people are usually ending their commutes rather than passing through.
“From that point of view, in Downtown Memphis it’s hard to justify supporting a whole lot of extra stuff compared to Union Avenue, where traffic counts are a lot higher,” Hill added.
However, he holds that Downtown could support a grocery store. The area does very well when a small mobility radius of about half a mile is considered because people are willing to walk from work or home. With Downtown’s booming apartment scene, he believes that a grocery store would work despite Downtown’s challenges.
With the Poplar corridor nearly built out, Hill said that shifting focus to mobility rather than density can uncover other suitable retail pockets with potentially lower rent.
“If you do a three-mile radius with demographics of individuals or households making over $75,000 with an age group of 20 to 40, you can’t reach more people that fit that profile than basically where Saddle Creek is,” he said.
“However, if you decrease the radius, you’ll notice other pockets that pop up that can do just as well as Saddle Creek, like Laurelwood and Chickasaw Oaks Plaza.”
In using True North, commercial real estate brokers select target age, income, family size, race and how far customers would be willing to drive to reach the location.
The map then outlines the most “mathematically ideal” locations to reach that segment.
“Density might not reach your threshold of what the market requires,” Hill said. “This shows how people are living and working in its mobile form.”