'Site Selection'
Cutting edge technology for the real estate industry
By Douglas A. Baumgartner

As the millennium approaches, the real estate industry is integrating innovation and technology into a changing real estate business. One aspect on the cutting edge of this change is site selection. As more and more companies are expanding, the way site selection is conducted is changing to accommodate the growing needs of multi-site users (MSU) and site selection professionals.
    To this day site selectors are still spending an inordinate amount of time in their cars driving markets and taking notes on the existing real estate stock. Using cutting edge technology combined with extensive local market knowledge, RealtiCorp, a commercial land investment fund, acting as a value added forward purchaser of land for expanding users, reduces this time significantly. It does this by delineating the areas in which each MSU needs to locate and then qualifies potential areas based on the user's criteria. By integrating Geographic Information Systems (GIS) technology with proprietary demographic databases of information, RealtiCorp professionals can quickly identify retail clusters, traffic flows, characteristics of individual neighborhoods-whatever the criteria may be-to help MSUs locate the best sites.
    "This system enables us to map a company's locations in a market, its competitor's locations, and then identify and analyze properties based on specific, in-depth site selection criteria. Through this method, we can pinpoint the best locations for a company's expansion," remarked Martin Navarro, vice president, director of sales & marketing for RealtiCorp.
    The real estate sector has always been slow in applying new technology. RealtiCorp has set a new standard for integrating technologies by building the company around the technology while simultaneously integrating core real estate fundamentals. The flexibility to change with the technology puts RealtiCorp in an enviable position in the industry compared to competitors who have to go through a re-engineering process and substantial capital outlays and training in trying to keep up with the rapid changes in the industry.
    RealtiCorp's process reverses the way site selection decisions have been made in the past. The technology is used as a Spatial Decision Support System (SDSS), instead of making decisions and then using technology to support development choices. The seamless integration of GIS and information technology throughout the company enables RealtiCorp to qualify and facilitate transactions in a responsive, efficient manner, handling much more volume than would otherwise be possible.
    This proactive approach of taking an MSU's locational requirements, defining areas of high suitability, and eventually buying and selling property that meets an MSU's criteria is a departure from the industry norm.
    "Our value added approach to land investing provides benefits to multi-site users of all types, i.e., retail, office, restaurants, hotel, single family tract developers, multi-family, etc.," commented Dan Bruce, president. "This process saves our multi-site user customers valuable time and money in their desire to expand rapidly while keeping site costs in line."
    Another important factor is the tracking of trends in the industry. Using GIS, RealtiCorp can provide unique insight into a specific MSU's expansion logic that helps to determine which areas and sites are best suited for a particular MSU. The GIS is used to match particular properties with the expansion plans of users.
    For example, a current lead was first established for a general merchandiser expanding through the southeast and southwest. No specific markets were given, however, a few locational parameters were identified . The first analysis selected all counties with a minimum population of at least 50,000. The population totals were then multiplied by the per capita income for each household. By dividing this number by the total number of general merchandise stores in each county, a wealth index was created to rank each county by potential opportunity.
    Markets within the top counties constantly undergo analysis to further refine the market area. At this point, the MSU's criteria: a minimum population, median household income, average household size, traffic counts and a minimum distance from all existing stores within 5 miles, were entered into the GIS at a block group level.
    These variables can either be viewed separately or through conventional analysis. Areas that meet all the criteria are then identified. Each of the variables is weighted according to the MSU's criteria, and all areas are reclassified on an equal ranking to provide an accurate depiction of suitable areas. This becomes more meaningful for the MSU as it actually returns a value that can be compared with other areas or sites.
    Since the data collection process is conducted internally from the proprietary data sources that have been compiled, quicker action on a request or on an identified lead is possible. Other companies providing similar services have to rely on a value-added reseller of business data, which tends to be costly and grossly out dated for analysis such as this. "Once all the information is gathered and analyzed, we prepare detailed recommendations for MSUs outlining the most suitable locations for them," said Navarro.
    Another tool available is store or location profiling. Top performing locations are selected, a profile is created and then used as a standard to look for other areas that meet a specified profile. The integration of market data and real time information, combined with the core fundamentals of a real estate transaction, are the driving forces behind this new approach to site selection.
    Another important aspect in the site selection process is timing. Depiction of the real estate development process would include tracking undeveloped land until its use is defined and a notable spike in its value occurs. This increase in value is ongoing until the land is completely developed. Typically the value of the property is no longer defined by its use but by its income stream. At this point it is usually bought by an institutional or private investor based on the income that the property is generating. Again, the value approximates the rate of inflation until that particular property falls out of grace or needs to be repositioned. Once the use is re-defined the value then spikes again and the process repeats itself.
    The key to this process is the balance of having the technology to automate all the operations; using the GIS in an integrated approach to make decisions pushes the technology out to the frontlines of the company and builds relationships with the users. It is a more efficient approach to the site selection and acquisition process, saving both time and money.
    RealtiCorp strives to leverage itself through technology; integrating it to a point where core processes revolve around automation and free up human resources for building relationships with an expanding list of users in the real estate community. After all, even with the growing technological advancements in the industry, real estate is still all about relationships.

About the Author:
Douglas A. Baumgartner, Director of Research and Investment Analysis, assimilates, analyzes and disseminates multi-site user information through RealtiCorp's GIS software and site selection databases, determining locations for the company's current real estate activity and identifying future opportunities. Prior to joining RealtiCorp, Doug successfully launched two start-up businesses: an Interlocking Stone construction company and a GIS data services company.

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