How to Vet a Retail Real Estate Investment Opportunity

by Rebecca Fien

Retail real estate can be a high-reward investment—but only if you know how to vet each opportunity with precision. The difference between a long-term, cash-flowing asset and a costly mistake often comes down to the quality of due diligence.

As managing partner of Falcon Realty Partners, Alex Deitch has evaluated hundreds of retail properties across the country. He combines data-driven analysis with real-world experience to help investors, developers, and retailers avoid pitfalls and focus on long-term value.

“Good real estate investments aren’t found by accident,” says Deitch. “They’re uncovered by asking smarter questions than everyone else.”

In this guide, we’ll break down the exact process Deitch uses to evaluate retail real estate investments—covering what to ask, what to review, and what red flags to avoid.

1. Understand the Local Market First

Before looking at spreadsheets or site plans, look at the location. The strength of the local market is foundational to a successful retail investment.

• Demographics: Is the area growing? What’s the income level? Do nearby residents match the likely customer base for the retailers involved?

• Growth trends: Review city planning documents, permits filed for future construction, and infrastructure developments.

• Competitive context: Are there other successful retail centers nearby—or is this a struggling corridor?

Deitch relies heavily on trade area mapping and foot traffic analytics tools like Placer.ai to make sure the site isn’t just “busy,” but aligned with retail patterns that match the tenant mix.

2. Analyze Foot Traffic and Behavior

Retail thrives on visibility and movement. Understanding when people show up matters just as much as how many.

• Use location data tools to review pedestrian and vehicle flow

• Match the traffic pattern with the type of retailers in place (e.g., lunch-time peaks for QSR, evening traffic for dining and entertainment)

• Check if foot traffic is growing, steady, or in decline

“Raw traffic counts don’t tell the whole story,” Deitch explains. “You need to know who’s passing by, when, and whether they’re likely to convert into customers.”

3. Review the Financials in Detail

Once a site shows demographic and traffic potential, move to the financials. Always request:

• Rent roll (including lease start and end dates, rent amounts, escalations, and renewal options)

• Operating expenses and CAM charges

• Net Operating Income (NOI) and historical performance

• CAP rate compared to similar properties in the region

Make sure the income is consistent and well-diversified. Heavy dependence on a single anchor tenant may pose risk if that tenant leaves.

4. Evaluate the Tenant Mix and Lease Structure

A successful retail property isn’t just about location—it’s about who’s inside.

• Anchor tenant strength: Is there a grocery store or major brand driving regular traffic?

• Co-tenancy: Are tenants complementary (e.g., fitness and smoothie shops) or competitive?

• Creditworthiness: National brands bring more lease stability than mom-and-pop operators.

• Lease terms: Are they long-term? Triple net (NNN)? What are the renewal options?

Review co-tenancy clauses carefully. If an anchor tenant leaves, other tenants may have the right to reduce rent or terminate their lease.

5. Ask the Right Questions

Even great-looking properties deserve scrutiny. Ask:

• Why is the property being sold?

• Are any tenants planning not to renew?

• Are there any unresolved maintenance or structural issues?

• What improvements are needed in the next 3–5 years?

Visit the property in person and talk to tenants if possible. You’ll often learn more from a five-minute conversation with a store manager than from 20 pages of marketing material.

6. Spot the Red Flags

Some warning signs don’t show up in spreadsheets.

• High turnover: Frequent vacancies can indicate deeper problems with foot traffic, management, or location quality.

• Deferred maintenance: Outdated HVAC, pothole-ridden parking lots, or poorly lit signage can signal ownership neglect.

• Complicated ingress/egress: If customers can’t safely or easily enter and exit the property, they may avoid it altogether.

• Declining anchor tenant: If the major draw for the center is struggling (or part of a chain that’s closing stores), reconsider the investment.

7. Consider the Exit Strategy

Before you buy, ask yourself how and when you might sell. A clear exit plan—whether in 5 or 15 years—should influence what you’re willing to pay and how you manage the property.

Think about:

• Future buyer appeal

• Lease expiration clustering

• CAP rate trends in the submarket

Putting It All Together: A Smarter Way to Evaluate Retail Investments

Vetting a retail real estate investment is a process that blends data, diligence, and gut feel. As Alex Deitch says, “The most successful investors don’t rush—they dig deep, ask the hard questions, and walk away from anything that doesn’t add up.”

At Falcon Realty Partners, that philosophy drives every acquisition. If you're evaluating a retail investment, this process can help you ask better questions, uncover hidden risks, and make smarter, more confident decisions.

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Alex Deitch serves as the Managing Partner of Falcon Realty Partners, based in Atlanta, GA. With more than two decades of experience in commercial real estate, he has spearheaded the development of hundreds of properties across the country. At Falcon, he leads the firm’s operations, expansion efforts, and acquisition strategy.