Commercial Facilities


To assess commercial facilities, consider two key factors:

  • The adequacy of existing commercial facilities to service the project:
    • Are these facilities located conveniently to the proposed project?
    • Are the available retail goods within the income capacity of the proposed project users or residents?
    • Are there serious gaps in the range of available goods and services?
  • The impact on surrounding commercial establishments:
    • Will the new project help or harm existing businesses?
      • For example, a new commercial project might displace existing small-scale retail establishments which become uncompetitive when compared to new enterprises. Similarly, a new office building or hotel may draw business away from existing hotels and office buildings.

Generally, three types of retail areas might be affected by the proposed project:

  • Neighborhood: These consist of small businesses usually within 5-10 minutes of travel time including food, drug, cleaning, and convenience stores organized around a supermarket.
  • Community: A central business district contains multifunctional economic and service enterprises including banks and specialty stores with access provided either by auto or public transit. In larger metropolitan areas, this usually does not include a food store.
  • Regional: This may be either the central business district of a metropolitan area or a regional shopping center, usually with two or more department stores and various specialty stores.

Important Considerations

  1. Is there adequate and convenient access to retail services? In the case of the elderly, this means that shopping for such essential items as food and medicine is within three blocks, and services such as banks and other convenience shopping are within walking distance.
  2. Do local retail services meet the needs of project occupants/users? Are they affordable and is the range of services adequate?
  3. In areas not readily serviced by retail services, can public transportation carry commuters to retail services within half an hour? If public transportation is not currently available, what are the plans to provide readily available transportation services? If access to vital services, such as a grocery store, is limited or requires multiple transfers via public transportation, consider options, such as establishing a paratransit service or alternative locations, before beginning the project.
  4. Will the proposed project adversely impact or displace existing retail and commercial services?

Analysis Techniques

Step 1

First, determine the nature of the facility (housing, hotel, etc.), its size, location, and the socioeconomic characteristics of probable users or occupants.

Step 2

Next, using a map or applicable market studies, evaluate the relationship between the project and existing commercial facilities. In the case of a housing development, for example, locate the nearest neighborhood, community, and regional shopping areas.

Step 3

Then determine occupant access to neighborhood amenities by probable mode (pedestrian, transit, or private automobile). Determine likely transportation routes and travel time. Determine any transportation limitations such as infrequent or irregular bus service.

Step 4

Make judgments about the range of goods and services and their relative prices:

  • Will these services meet the needs of project users or residents?
  • Will access be adequate?

Demographic Considerations: Also take into account demographic factors that influence shopping needs and preferences. For example:

  • If the project caters to a population largely dependent on public transportation, consider whether the shopping areas are accessible by transit or walking.
  • If the project users/residents are elderly or disabled, consider the availability of accessible transportation services and shopping areas.
  • Young working adults have different shopping patterns than families with small children or elderly persons.

To assess the impact of a new commercial development (hotel, shopping complex, etc.) on existing commercial enterprises, identify existing potentially competitive establishments and gather data concerning their sales, markets, and characteristics of patrons. Some new commercial enterprises help to strengthen a commercial area by generating new demand, which in turn benefits existing establishments.

Other new establishments might serve to displace existing enterprises. For example, a new supermarket might draw business away from a “mom and pop” local food store. However, they usually serve a different clientele and there may be a need for both. The determination of likely impact must be made on a case-specific basis involving a careful analysis of both primary and secondary data. Consultation with real estate marketing experts, commercial appraisers, and/or local commercial realtors may help in gathering data and making determinations.

A determination of negative impact might result if it is found that existing commercial facilities are inadequate to meet the needs of the project users or residents. Poor access is the most common problem; however, in some locations, the existing commercial establishments can have too limited a variety of goods available or unusually high prices.

A determination of negative impact might be displaced or resolved if a new commercial development is also proposed, such as a grant-sponsored commercial venture.

Mitigation Measures

When a housing development is poorly situated in relation to shopping, mitigation might include arranging additional or new transportation services either through the local transportation authority or through a social service agency (especially for elderly or disabled residents). If other services are not available or are inadequate, it may be appropriate for the developer or sponsor to purchase a vehicle to transport residents. The local planning agency could encourage new retailing in the area, perhaps through a package of incentive programs (i.e., low-interest commercial development loans from the Economic Development Administration (EDA) or Small Business Administration (SBA)).

In the case of existing retail or other commercial facilities facing the adverse effects of new commercial enterprises, various business improvement loan programs (such as EDA- or SBA- funded loan programs) could assist local businesses in making needed improvements to become more competitive.

Resources to Reference/Experts to Contact

  • Local Chamber of Commerce
  • Commercial Realtor and/or Commercial Appraiser
  • Commercial Development Specialist
  • Local Planning Agency