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Mid-America Blog

Emergence of the Urban/Suburban Hybrid Market

Written by Kevin Reinke

There’s no question that the top location choice for a new restaurant concept entering a suburban market is predominantly in the super-regional trade areas. Super-regional trade areas are considered first tier priority because they are brand builders, and possess an expansive geographical draw with mature residential populations, dense office populations and strong retail and hotel density.

However, over the past the few years there has been significant restaurant growth in various urban/suburban trade areas that have historically been passed over for the “sexier” super-regional markets. These urban/suburban markets can be considered a hybrid type of trade area. They function like a typical suburban market dominated by power centers and vehicular traffic but still have the high population density similar to that of a large downtown city. These hybrid trade areas not only have a much higher population density than a super-regional trade area, but also typically have a strong concentration of blue collar and white collar workers with disposable income. This is what make these hybrid markets so unique.

The super-regional trade areas in the Chicagoland region see, on average, about 1,000 people per restaurant while the emerging urban/suburban hybrid markets can see anywhere from 10,000 to 15,000 people per restaurant. The higher the amount of restaurants per capita typically indicates high demand, a signal that the diversity of options is valued. This also indicates higher competition and therefore risk of diminished sales revenue.  While most emerging hybrid markets have low competition, the key to their success is not only the lack of competition, but also the amount of disposable income the average household has.

It’s clear that some restaurant concepts have begun to fully understand these untapped markets and the significant revenue potential they possess. These urban/suburban hybrid trade areas that were traditionally passed over, or left at the bottom of the list on development pipelines, are now emerging as first tier trade areas.

Restaurant Density Map
Restaurant Density Heat Map, Created by Trulia

Kevin Reinke | Broker Associate
Mid-America Real Estate Corporation
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