Imagine being a commercial real estate broker and landing a lucrative deal thanks to the predictive power of a geographic information systems (GIS) analysis tool that pinpoints the next high-demand area before it bubbles into the mainstream market. That's the power of advanced location analysis in action.
In this guide, we’ll explore the key advantages location analysis offers, illustrating how it can supercharge your deal flow and increase investment returns.
Understanding Location Analysis in CRE
If you’re thinking about buying, leasing, or developing CRE properties, analyzing the surrounding location can yield key insights.
In CRE, location analysis involves studying the geographic-specific data around a chosen property or land parcel. You might make use of advanced technology, like GIS analytics, to get a clear picture of the spatial and market dynamics around a certain location. These days, GIS-powered location insights can be easily accessed through cloud-based analytics tools.
GIS tools help investors and brokers analyze:
- Market trends
- Demographic dynamics
- Infrastructure developments
By layering different data sets onto one map, users gain a comprehensive view of everything from population density to areas with the highest foot traffic.
Real-time mobility data, sourced from mobile devices, offers insights into people’s movement patterns and urban development trends.
Enhancing Deal Flow with Advanced Location Analysis
Deal flow in CRE includes everything from finding and assessing properties, to finalizing real estate transactions. Successful professionals in the field often stand out because they can regularly find and secure valuable deals. GIS tools are instrumental in this, providing critical location data that aids in decision-making. Here’s how you can leverage location analysis to enhance your deal flow:
Accessing Area-Specific Market Research
When investors and brokers dive into area-based market research, they burrow deep, dissecting data layers to unearth lucrative opportunities that may not be on everyone's radar.
This deep dive provides an intimate understanding of the location of a property, capturing the essence of its inherent potential. Such insights can reveal off-market gems and high-value properties that might escape the average eye.
Grasping the demographic texture of an area is key for insightful decision-making in CRE, specifically when it involves buying or leasing decisions. These demographics include vital metrics like:
- Population density
- Income levels
- Consumer behavior and preferences
Moreover, keeping a pulse on evolving market trends ensures you're ahead in the race. Being the first to recognize and act on emerging opportunities becomes a necessary advantage in fast-paced markets like retail, for example.
Identifying High vs. Low-Yielding Assets
Analyzing the locations around potential property deals helps CRE professional to separate the profit-makers from the deal breakers.
You can use a GIS platform to discover foot traffic trends or run a trade area analysis around your property to get bird’s eye view of the location’s potential for profitability.
Armed with this information, CRE professionals can choose the investments that offer the best returns. They can also avoid those with limited market appeal or lower potential yields.
Analyzing Comparative Properties
When you have several properties on your radar, you need a method for quickly identifying comparative properties in terms of size, price, rental rates, and location. These are sometimes referred to as ‘comps’.
It’s a time-consuming task when you must aggregate the data from various online real estate portals, especially if the building has unusual characteristics that are difficult to compare.
A GIS-based location insights platform, like AlphaMap, does the heavy lifting for you. You can pull up detailed building data related to specific locations within a few clicks.
Time is often critical during the negotiation stage of a property deal, and having precise building data at your fingertips helps you make informed decisions more swiftly and effectively.
For example, say you’re a broker assisting your client in the purchase of an office block with unique characteristics. The price of the property seems quite high considering the building requires refurbishment.
You hop on to AlphaMap and find extensive building data that matches the specific characteristics of the property. While AlphaMap does not provide pricing data (yet), it allows you to gather all the essential building details to quickly seek comparable properties from other sources.
Alternatively, you could punch a comparative property’s details into AlphaMap to check that the characteristics match the original property. You gather detailed information which indicates that there might be room for negotiation with the seller. You’re able to help your client negotiate a better price on the property, and they close the deal.
Streamlining Operational Processes with Real-Time Data
If you’re a CRE brokerage firm with many agents on-the-go, each day, it’s essential to streamline operational processes. Having access to a user-friendly GIS platform allows your team to access real-time data with ease. Many GIS tools also have accompanying mobile apps meaning you’re able to access in-depth statistics while on site.
For example, say you’re in a meeting with a client and they ask you about the levels of foot traffic in a specific location. You can look at that up right away. You can also access foot traffic trends, and so much more.
Benchmarking against Client’s Competitors with Advanced Analytics
In the retail sector, staying ahead means having an in-depth understanding of your competition. It’s not always easy to get access to this information, however. And certainly not quickly. Using a location insights tool, you’re able to access in-depth analytical data.
AlphaMap, for example, aggregates data from multiple sources, including public records, Advan, Pass-by, Unacast.
By integrating these data sources into a single platform, users can quickly access comprehensive information without needing to search through multiple sources manually.
This makes is super easy to research information about your competitors such as:
- Location advantages
- Foot traffic statistics
- Demographic reach
You can then incorporate your learnings into your own strategy. AlphaMap also has a powerful void analysis tool called TenantFinder™, which quickly identifies gaps in the market. You can use it to seek out profitable deals that would be impossible to discover using manual methods.
Optimizing Tenant Mixes for Retail Clients
Retail centers require a complementary mix of tenants to maintain successful business operations. This means a collection of shops that serve the requirements of the local community, as well as bundling together various shopping tasks.
Consider a small-town shopping strip with a convenience store as its anchor. Alongside the store is a pharmacy, a greengrocer, a hardware shop, and a fish and chips take-out.
These shops have been functioning successfully together for over twenty years and it's not difficult to see why – it’s simply about proximity and convenience! While a customer might pop in to collect their monthly medicine, they’ll probably pop in to get some screws and perhaps some snacks for later, all during the same errand.
Examples like the one above are not easy to orchestrate in large shopping malls, or in larger towns and cities where the retail competition is fierce. CRE professionals use location analysis to study the area around a specific mall. They also study different retail brands, looking for potential tenants that match the demographic and market conditions of the mall.
It’s a time-consuming process and not always guaranteed to work out. AlphaMap’s TenantFinder™ feature uses GIS to help you source potential retail brands that would be the perfect fit for your location, backed by real-time data analytics.
This process takes the guesswork out of it. As a result, you’re much more likely to find good-fit tenants that will help your shopping mall flourish long into the future.
Optimized tenant mixes matter when reviewing CRE deals, because those with strong anchor tenants and compatible smaller shops, are more likely to succeed in the long run. You might even use TenantFinder™ to run the numbers on the existing tenants in a retail center you’re considering acquiring and use the results to negotiate a better purchase price.
Presenting Deals to Clients
For brokers, presenting deals to clients requires clear communication. Not always easy when crunching a lot of in-depth data.
Some GIS platforms have a presentation feature to help sift through the data. AlphaMap’s Map Builder feature has been designed to be intuitive and user friendly.
Using advanced search and filtering, the platform allows users to narrow down their search criteria based on location, state, national, and more, right inside the Map Builder. You can easily add text, annotations, your own branding, and various other overlays. Save your map to edit later or download it as an image to insert into a report for your clients.
Selecting the Right Location Analysis Tools and Partners
When selecting a GIS-based location insights tool, it can be difficult to know which one is best. Key factors to consider in your choice should include:
- Privacy – Is your data secure and encrypted?
- Accuracy – How does the platform aggregate data and is the data sample large enough?
- User-interface – Is the platform easy to use? Is it simple and intuitive? Is the navigation logical and straightforward?
- Integration capabilities – Does it work seamlessly with your other tech tools?
We’ve designed AlphaMap to make it easy for users to navigate and access the information they need. We’ve also gone to great lengths to ensure the accuracy of our data.
With information on more than 10 million commercial properties across the US, AlphaMap provides extensive coverage for any market. Our analytics combine over 40 different data sets to offer the most thorough property insights available. Additionally, we aggregate location data from more than 100 million mobile devices to deliver accurate estimates of foot traffic.
Final Thoughts on the Vital Role of Location Analysis in CRE
Understanding location analysis deeply is essential if you're in commercial real estate. As our technology gets better and smarter, so does our competition. As a result, the insights we can pull from location data are becoming indispensable if we want to stay ahead. They not only help us dodge the risky bets but also spotlight the promising opportunities.
How are you adapting and innovating? Are you planning for the future and making sure you don’t get left behind?
Book a demo with our team if you’d like to test out the capabilities of our smart and mighty GIS tool.
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