Psychographics give brokers an edge in retail site selection.
Access to consumer information has improved
the site-selection process, but in today’s competitive market, traditional
demographics may not provide the most complete picture of a trade area’s potential.
Commercial real estate professionals can obtain more accurate assessments of
location value through psychographics — detailed information about residents’
lifestyles and purchasing patterns and decisions.
example, suppose a shopping center leasing agent is targeting service tenants.
After analyzing the trade area’s age and income demographics, he decides it can
support a dry cleaner tenant. But analyzing psychographics shows a large number
of two-income working professionals. With this information, the agent can
attract an established dry cleaner with a reputation for quality service,
instead of a start-up mom-and-pop shop with no track record — or credit
short, psychographics enhance demographic data. While demographics generally
measure an area’s population in terms of size, age, income, and ethnicity,
psychographics measure the lifestyles and purchasing behaviors of the
a psychographic profile, households in a trade area are categorized into
segments. For instance, one segment may comprise young, affluent married
couples with children. This segment lives in the suburbs and buys
child-centered products. Their children participate in karate, soccer, and
other sports. Another segment also is composed of young, affluent married
couples with children. However, these families live in a rural setting and
purchase camping gear. These two segments are similar in their demographics
(age and income), but very different in psychographics (lifestyle and buying
Real Estate Benefits
retailers, restaurants, and even hospitals use psychographic profiling systems
to find new sites. Psychographic profiles can help commercial real estate
professionals communicate more effectively with clients who seek sites for new
developments or leasing.
example, a Fort Worth, Texas, developer partnered with a landowner on a retail
shopping center ground lease. The developer assumed the area’s consumers were
middle-of-the-road in terms of their lifestyles and income levels. However,
demographic information covers large areas, and the results are stated as an
average, which often misleads developers. To gain a better understanding of the
trade area around this Fort Worth site, the landowner and developer
commissioned a psychographic study.
this trade area was populated by households with household incomes of about
$60,000. However, the psychographic study of the consumers living in these
households showed that many of them earned well above the average and their
purchasing behavior revealed that they had high-end department store credit
cards and frequented upscale retailers and restaurants. The results of this
study were then used to market the development. Today, the Chapel Hill Shopping
Center includes upscale retail concepts such as an 80,000-square-foot HEB
Central Market grocery, James Avery Craftsman jewelry store, Mi Cocina
restaurant, Borders bookstore, and specialty fashion stores.
a better understanding of the area’s psychographics helped the developer
attract the right tenants and charge higher lease rates. It also allowed the
landowner to create a ground lease worth several million dollars more than
research can be a key part of commercial real estate professionals’ marketing
materials. Whether brokers mail clients new listing fliers or create online
marketing brochures, including psychographic data enhances the information’s
value. Yet similar to any kind of market research, psychographic data is only
as good as its source. When considering a psychographic study, be certain to
select an experienced market research company that has a proven track record of