Businesses of a Feather Flock Together
Where will retail outlets in your town be found ten years from now? If you knew the answer, you’d borrow all you could and start buying property tomorrow. Fortunately, you don’t need a crystal ball to figure out future local development. You just need to understand agglomeration. This basic real estate concept strongly influences where an area’s real estate growth occurs.
Agglomeration means retailers like to lump together. It’s related to the “gravity theory” of retail: the more square footage of related retail you have concentrated in one area, the more gravity or pull the area generates on consumers who live farther and farther away.
Car dealers are a common example of agglomeration. In College Station and Bryan, one car dealership moved to Earl Rudder Freeway. Another soon followed. Nearly all were located along that same stretch of highway within a few years.
Retailers don’t view nearby related businesses as competition. They see them as a benefit. Having the widest possible variety of vehicle shopping in a small area draws customers from miles away. Being able to view the widest assortment of offerings in the shortest time helps consumers make comparisons quickly.
Agglomeration works well for other retailers, such as dry cleaners. They locate near a supermarket where the drawing power of the bigger store works for them. Outlet malls are another example. Together, the individual outlets have the power to draw consumers from 50 miles away.
Las Vegas is an example of an entire city that is an entertainment agglomeration; people aren’t going to fly four hours to the Nevada desert unless they have countless reasons to go. Or, drive by Six Flags Over Texas in Arlington and count the number of dining, lodging and entertainment opportunities available in one large agglomeration.
Convention centers are typically one part of an overall convention and tourism strategy designed to bring vacationers and business travelers to the community.
Ideally, a convention center is within walking distance of convention-quality dining, entertainment and lodging. Another popular option is to have the agglomeration linked by local transportation, such as a regularly scheduled trolley that weaves throughout the convention district.
In many communities, physicians like to locate their homes near the hospitals where they work. Upscale housing developments near the health-care district may readily attract physicians and related caregivers.
In university-oriented towns, agglomeration works well with eating establishments. One stretch of University Avenue in College Station has become known as “restaurant row” for that very reason.
To research where agglomeration might be occurring in a particular Texas metro, check out the market research section of the Real Estate Center website.
We have market overviews and data on area population, demographics, education, employment, hotels, housing, industrial, infrastructure, medical, military, multifamily, office and retail.
