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Market Reconnaissance, Real Estate Economic Analysis, & Strategies For
the Enhancement of the Main Street Corridor
Client: The Village of Menomonee Falls, Wisconsin
The Village of Menomonee Falls retained Gruen Gruen + Associates (“GG+A”) to conduct an overview of the market for retail and office space in the Main Street corridor and to evaluate the potential demand for a new hotel. This research was part of a program to formulate a neighborhood plan for the enhancement of Main Street.GG+A inspected the area, interviewed real estate brokers, property managers, developers, and retailers, and prepared a quantitative model of present and likely future demand and supply based on the present and forecast future demographic make-up of the relevant market area and retail inventory identification. Based on the analysis of demand and supply and an assessment of the comparative advantages and disadvantages that apply, GG+A identified a destination niche strategy, including building on the well-established existing destination businesses by attracting complementary and unique sporting goods, outdoor recreational and showroom home improvement uses that would benefit from the same comparative advantages enjoyed by the existing successful businesses. A destination-oriented restaurant row was also identified as a market niche to cultivate, given the highway accessibility and visibility, shortage of restaurants for employees in the immediate area, favorable demographic characteristics, and indications of user interest.
For the office market reconnaissance, GG+A conducted interviews with brokers and developers, analyzed office supply data, reviewed the relevant literature on what makes successful suburban office locations and compared these attributes with the comparative advantages and disadvantages of the Main Street corridor. Based on the assessment of market conditions and the competitive position of the corridor, we reached a judgement on the potential for feasible office space development in the corridor.
One of the key tasks was to ascertain if sufficient demand exists or is likely to develop to support a new hotel at the site of an existing hotel that is no longer market responsive. To identify the relevant supply competition, GG+A interviewed managers of hotels and reviewed secondary data on room rate and occupancy rate trends by type of product and location. To estimate the potential demand for hotel rooms, in addition to drawing on the interviews with managers of competing hotels, GG+A conducted a survey of large businesses in the area. Based on the synthesis of the secondary data analysis, supply interviews and demand survey, GG+A prepared a model to forecast hotel room demand attributable to employment growth, household growth, and an improving economy. GG+A identified the relationship between current and forecast supply and demand for hotel rooms. Based on the assessment of comparative advantages and constraints and forecast market conditions, GG+A estimated the likely obtainable occupancy and average daily room rates and described the characteristics or programmatic elements to which the limited service hotel would need to conform to be market responsive.
To test for financial feasibility, GG+A simulated the real estate investment results of a prototypical hotel and a prototypical restaurant development. Based on the real estate economic analysis, GG+A identified the likely investment behavior of owners and would-be developers. GG+A synthesized the results of the market and investment analysis to identify a strategic action plan, including marketing initiatives, physical and way-faring enhancements, and the judicious use of incentives to encourage the evolution of Main Street to newer destination retail, hotel, restaurant, and entertainment functions. GG+A recommended criteria for when and how to use incentives and transaction structures for when incentives are provided.