"How Do We Make Money
The following text is Gil Castle's final draft of the real estate column appearing in Business Geographics, November/December 1996
Copyright © 1996 GIS World, Inc.
Atari founder Nolan Bushnell once said: "Business is a good game-lots of competition and a minimum of rules. You keep score with money." Another favorite quote of mine is from the actor Errol Flynn: "My problem lies in reconciling my gross habits with my net income." The proverbial bottom line is that money matters. So, how do we make money in real estate with GIS?
The classic answers are by improving productivity, lowering costs, increasing marketplace stature, and so on. Those are nice generalities, but how do we apply them to our specific jobs and businesses? In my various training seminars and consulting projects, I keep finding that a "who-what-how" matrix I developed several years ago* is still a very useful organizing principle. The matrix, shown below, essentially arrays the industry players ("who") against the daily activities they pursue ("what") against various products and services for helping them in those activities ("how").
When I first introduced this three-dimensional matrix, only a handful of its 400+ cells had much happening. My admonishment back then was "Pick a niche if you want to get rich." Some matrix cells still are empty, thereby affording an opportunity for creating and dominating a market niche, but most are not. The question now becomes one of finding the hottest niches, and then seeing if you can outperform your competitors.
I don't have any rigorous market research identifying the hottest niches, but that has rarely stopped anyone from opining or even investing, so here goes. I'll distinguish between opportunities for large organizations versus small entrepreneurs.
Major brokerage firms, institutional investment managers, corporate real estate departments, and other large organizations will continue to benefit from using GIS for presentation purposes, especially as they become better and better at integrating GIS with PowerPoint-type packages and multi-media systems. How you tell your story is, after all, often as important as the story itself. At the same time, though, an ever increasing number of organizations are finally recognizing the analytic power of GIS. Retail site selection is the no-brainer application, but more subtle uses of GIS in decision support are catching on. These applications stem from real estate essentially being a game of information arbitrage. Accordingly, the more data that can be efficiently assembled, integrated, queried and displayed in one system, the better-and GIS technology is excellent for just those activities. The best example is probably the MetLife Realty Group system.**
Turning to entrepreneurs, my industry comrades whose businesses are taking off the most quickly are focused on developing customized GIS applications for specific clients. They frequently also are value added resellers (VARs) for one or more software vendors and data sources, but the real money is in the needs assessment and programming. Their clients recognize the potential value of GIS, but don't want to bother learning or modifying generic GIS packages. The clients want a "Just Do It" button; the timely unbundling of GIS software by the vendors-thereby facilitating the Designer GIS***-is certainly fortuitous for the emerging cadre of GIS "app" developers.
* "Location, Location, Location Drives GIS in Real Estate," Business Geographics, May/June 1993
** "MetLife Realty Group Invests Enterprisewide," Business Geographics, July/August 1996
*** "Designer GIS Fashions a New Era," Business Geographics, May 1996