"The Bigger Picture"

The following text is Gil Castle's final draft of the real estate column appearing in Business Geographics, February 1997

Copyright © 1996 GIS World, Inc.

The proverbial "tip of the iceberg" accounts for only about 10 percent of the iceberg's total mass. Most of my columns over the last three years have focused on the most visible 10 percent of business geographics in real estate. Since this is the annual issue of Business Geographics devoted to real estate, now is an appropriate time to dive below the surface and look at the underlying formations affecting business geographics in the real estate industry. I see four salient trends.

Retail site selection is the private sector application of business geographics technology that has caught on the most quickly. This is not surprising, given that site selectors were already relying heavily on (typically) city maps showing population, income, retail sales, etc., by census tract. Business geographics technology enhanced the speed, choice of variables, analytic tools, and presentation quality of an existing, well-established procedures. The benefits of adopting the new technology—essentially, of automating a manual process—were obvious.

Less obvious are the benefits of applying the technology to a broad spectrum of other types of site selection. Retail site selection is far from being the only type. Indeed, as Mike Robbins* has frequently pointed out, virtually all real estate transactions come down to one of two possibilities:

Focusing on the second possibility, how many entities are in search of a site? With 15 million businesses and 200 million households, the United States has a huge number of players in the real estate industry. Moreover, these are not one-time players; for example, the average household relocates every five years. Site selection, again, is a far bigger business geographics opportunity than most people realize.

How can we begin to get a handle on the opportunity? Broadly speaking, I see five market segments:

These groups use business geographics in site selection in different ways, though some redundancies exist. For example, families, brokers, and banks all need an appraisal, preferably GIS based, when a new home is being purchased. Retailers, bankers, brokers and appraisers all need a trade area analysis. Bankers, Wall Street investors, insurance companies, and engineers all need an environmental hazard due diligence from ERIIS (Herndon, VA), EDR (Southport, CT) or other supplier.

Future columns will focus on trends in site selection among some of the above groups, probably beginning with the rapidly evolving and expanding uses of business geographics technology by Multiple Listing Services (MLSs) in helping households to find and purchase homes.


* Former professor of appraisal at the University of Wisconsin at Madison and Denver University, currently the CEO of GRAASroots Real Estate Counseling in Englewood, CO, and an officer of the Business Geographics Association