Real Estate, Geography and

Real estate market analysis is executed using highly sophisticated geospatial analytic procedures, geospatial technology, and geospatial databases. The objective of geospatial real estate market analysis is to improve real estate decisions regarding all kinds of real property. Beneficiaries of real estate geography include individual real estate consumers, individual real estate investors, large Real Estate Investment Trusts (REITs) and pension funds, financial institutions, multibranch retailers, advisory firms, economic development agents, and others holding real estate assets.

Real estate market analysis is the “location, location, location” of real estate. Real estate market analysis is essentially “information arbitrage,” that is, the generation of small but important advantages in useful information about real estate opportunities (Thrall, 2002) and transacting on that knowledge. Geographic information systems technology, geospatial analysis, and geospatial data are core to the acquisition and utilization of information in the real estate market.

Geospatial technologies change real market analysis from a solely financial decision to a holistic one tied to location, submarkets, aggregate markets, and geographic interdependencies. Real estate market analysis is a process that culminates in a decision regarding property, as well as a prediction of future real estate trends across space and time. It involves taking past and current information and assessing current market conditions and predicting future market conditions for specific sites, submarkets, aggregate markets, and the range of other real estate asset categories.

A real estate geographer often proceeds geographically top-down, beginning at a very broad level, such as a nation or state/province, then interpreting geospatial data related to a smaller area, such as a specific county, then identifying submarkets, and last zeroing in on a set of specific sites for comparative evaluation.

Anyone involved in real property markets benefits from and likely currently uses real estate geography. Developers must understand factors such as rent levels, absorption, construction costs, underserved markets (gaps), and the cost of capital to make intelligent decisions about when, where, and the “go” or “not go” development decision. Those who plan to lease space create geospatial due diligence documentation, including analysis of current market rents and the likely future trajectory of rents; the due diligence informs how much to spend on rent and how long the lease should be. Purchasers, both users and investors, create geospatial due diligence documentation, including an analysis of current market values and the likely future trajectory of market values; the geospatial due diligence is input into the financial analysis, which together informs how much to invest and the expected or desired holding period. The value that a real estate broker has to a buyer or seller is the value of their “information arbitrage.” Brokers need to have real-time access to geospatial information and geospatial analysis of the marketplace to be credible at marketing space and representing tenants. Government officials can benefit from the skills of the real estate geographer to anticipate infrastructure need that results from new development and to coordinate economic development initiatives.

Real estate geographers work with a development team. Financial analysts depend on the business geographer to provide information for the evaluation of the necessary return to investors in order to compensate for risk and opportunity cost. Other team members include those who evaluate the cost to either newly construct or replace the real estate asset within a given geographic submarket. The real estate geographer receives this information and then estimates the tipping points between investment and disinvestment—namely, when to go into the market and when to exit the market.

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