When it comes to developing new property sites and filling vacant ones, it's hard to ignore the age-old real estate adage: location, location, location. While finding and selecting lucrative locations without missteps and faulty investments is challenging, software is helping real estate professionals make sound decisions.
"There is a lot more pressure on all people involved in real estate not to make mistakes in real estate investments and also to be able to monitor the performance of their assets," said Jim Stone, president and founder of geoVue, a site-selection software company based in Woburn, Mass.
To alleviate some of that pressure, real estate professionals are increasingly relying on site-selection software--a research tool helping them make site selections more accurately; manage portfolios more efficiently; and minimize the risk of unsuitable properties.
Nuts and bolts
Most site-selection software in today's market share fundamental features like the ability to obtain a comprehensive demographic report and digital maps describing the population, average income, weather conditions, highway accessibility and other descriptive traits of areas by entering specific state, city or even intersection-level details.
Because the software is helpful in selecting sites, it is geared more toward assisting tenant clients than building owners or property managers, said Mike Henderson, director of location analysis at Cushman and Wakefield, a New York City-based commercial services firm.
In the long run, property managers could benefit from tenants staying in locations longer as a result of selecting profitable sites based on insightful information the software provides, Henderson said.
Stone said site-selection software can help users hone in on the best prospective properties, offering advantages like perspective, competitive analysis and efficiency. Speaking to the software's advantages, Stone said geoVue's business has tripled since 2001.
Software at work
Site-selection software is especially helpful when the decision of where to set up shop requires consideration of several cities or building sites, Henderson said. Cushman and Wakefield helps clients determine the best location for plants, offices, distribution centers and other facilities.
Henderson created an in-house site analysis program at Cushman and Wakefield, ranking sites based on demographic input pertaining to a site and the weight clients put on certain characteristics they're seeking in an area. The program ranks each site's suitability according to clients' needs. Clients are then presented with each city's or building's specific score.
"We determine what categories are more important and put a weight on those," Henderson said. "Then within each of the categories there are subcategories, and we figure out weights within there. At the end, there is a formula that gives every city a point on a one to 10 scale; it could be 1.2 versus 9.6."
Typical demographic criteria include population composition, expected population growth, population within certain age groups, education levels, business costs, taxes, real estate costs, labor components, distance from airports or freeways and climate.
Stone's geoVue software also relies on demographic information, helping clients make more informed decisions.
Grubb & Ellis New Mexico, AMO, based in Albuquerque, N.M., uses geoVue's software to analyze their properties' demographics and do competitive analysis when working with retailers renting space.
"We'll look at competition around the city or around a trade area, and the software gives us feedback for the retailer about where the competition is located and the demographic makeup of the area," said Ken Schaefer, director of brokerage services.
For further accuracy, Grubb & Ellis New Mexico subscribes to online lists of companies by the North American Industry Classification System code--a system providing compatibility statistics about business activity across North America--and then compiles the information gathered from these lists in an Excel spreadsheet. …