"Let's Make a Deal!
The following text is Gil Castle's final draft of the real estate column appearing in Business Geographics, September/October 1994
Copyright © 1994 GIS World, Inc.
The real estate industry encompasses diverse players, each of whom have distinct uses for business geographics. Past real estate columns addressed appraisal, mortgage underwriting, corporate real estate, investment management, etc. This column focuses on real estate brokerage. Brokers bring together sellers and buyers of properties, usually for a percentage fee of the selling price. Brokers also bring together leasors and leasees, e.g., for a five year lease on three floors of an office building.
As with most real estate professionals, brokers typically specialize in either residential or commercial properties. Residential brokerage was discussed previously, in the March/April 1993 issue of Business Geographics. Since then, the GIS products covered in that column have been enhanced (for example, Latitude™ now can display photographs); an ever greater number of multiple listing services have adopted GIS and other business geographics technologies; and the National Association of REALTORS® has become a value added reseller (VAR) of GIS software and data to its members.
Concerning commercial brokerage, at first blush one would not expect these professionals to be particularly interested in GIS. Brokers are people-oriented, relying on interpersonal relationships fostered over the years to bring in new business. If they use computers at all, the likely applications are electronic roledexes and tickler files. Further, they tend to be very cost conscious, since their earnings are highly volatile. Why should they increase their overhead — especially for technology that requires periodic additional expenditures (i.e., information updates) and does not bear directly on the way they do business?
Yet, the above notwithstanding, brokers are possibly the segment of the real estate industry most actively pursuing GIS. The reasons are partially due to the internal decision support a GIS can provide: identifying buildings for sale (in the same manner as residential brokers); determining a realistic asking price (see my column on property valuation in the November/December 1993 issue of Business Geographics.); helping a client in site selection (see the Walker Companies case study below); and so on.
The principal reason, though, appears to be to gain a marketing advantage. Major maneuvering is currently underway between the nation's largest firms (CB Commercial, Grubb & Ellis, Cushman & Wakefield); nationwide confederations of independent firms (New American Network, ONCOR International); and a myriad of very small firms figuring out how high tech tools can help them fend off the big players. All recognize that GIS holds incredible potential for demonstrating in-depth knowledge of one or more cities — not only the traditional real estate factors, but also relevant socioeconomic and regulatory considerations. Perhaps best of all, the highly visual products of a GIS provide the sizzle as well as the steak.
Brokers are driven more by the stick then the carrot. That is, a few will see the advantages of GIS and be the pioneers (chasing the carrot). Most, though, will not follow suit until they realize their competition has a gained an advantage — and then everyone wants the same capability, and right now (driven by the stick). The brokerage industry is fast approaching that point vis-a-vis business geographics. The reason is that a few pioneers — but extremely important pioneers — are startling the industry.
Three cases in point: CB Commercial Real Estate Group (Torrance, CA) has an aggressive program to roll-out GIS to its 85 offices domestically, if not internationally; see Lisa Ballantyne's article in the May/June 1994 issue of Business Geographics. Walker Companies (Atlanta, GA) is shaking up the warehouse brokerage business nationwide with its GIS encompassing labor force characteristics, real and personal property taxes, transportation access, as well as asking rents, vacancy rates and similar building-specific information; see John Warden's paper in the GIS in Business '94 Conference Proceedings. On a much more localized basis, Pizzuti Development Inc. (Columbus, OH) has been effectively using GIS for promoting its commercial brokerage business over the past three years. Brokers and their clients can display and analyze the locations of 2,200 office and industrial properties in a two-county area; up to 42 attributes on 12,000 tenants; and related information such as photographs of the buildings. Especially attractive to property owners is the brokers' ability to generate a search radius around a client's property, find all tenants with expiring leases within that radius, and print mailing labels for sending promotional literature to those potential tenants.
Brokers are undeniably in the front lines of the real estate industry. Every time another broker embraces the technology, the bottom-line relevance of business geographics generally and GIS specifically becomes all the more indisputable.