The Genius of GIS
Integrating market information turns data into dollars.
Experience and technology are a potent combination in commercial real estate land acquisition and site selection. While there is no substitute for local area knowledge, having the ability to specify, analyze, and package local market information to meet a particular need impresses clients. However, being able to produce credible information in a short amount of time can often seal the deal.
But building local market information databases and integrating commercial real estate knowledge is not an eleventh-hour task. In fact, it was a 20-year project for Tony R. Rickard, CCIM, owner of Chesapeake Commercial Properties in Matthews, N.C. “I've been doing residential land and retail site selection since 1986. But today, I can tell a developer to give me 30 minutes of his time and he won't regret it.”
That's about the amount of time Rickard needs to locate “the right site for the right price.” Using his Demographic Information Research Technology, Rickard analyzes online data from national, state, and local sources and matches them to the client's site requirements.
“As a contractor, engineer, and real estate professional, I have developed [this program] to assist in meeting the needs of land assemblage for developers and other users in the Charlotte-Mecklenburg County, N.C., area.” This brief overview of Rickard's DIRT system may help others to create their own technology-based market analyses.
The success of any information system begins with the data it contains. Rickard collects data for nine counties located in North Carolina, South Carolina, and Virginia. He includes
• market data, which are historic, current, and projected demographic trends at the submarket level;
• descriptive data, which cover land parcels' size, owners, assessed value, identification numbers, zoning, and comparable sales;
• amenities, such as locations of sewer and water lines, traffic signals, roads and other transportation systems, schools, and shopping centers; and
• physical data, such as flood plains, topography, and aerial photography.
“Some counties provide daily data, others collect and disseminate it quarterly. Some organizations offer it free of charge, others charge a fee for it,” he says. Along with local sources, he also uses demographic data from STDBOnline and Scan/US.
Creating Visual Sales Tools
Still, data in the form of spreadsheets doesn't sell property. The key is visual interpretation, Rickard says, and for that he uses a geographic information system, or GIS. Several national companies, such as MapInfo and ESRI, provide sophisticated GIS products that include multiple-layer analysis, thematic mapping, and aerial imaging overlays. “I use ESRI's Arc Explorer, ArcView, and ArcGIS 9, which I classify as beginner, intermediate, and head of the class,” Rickard says.
In the simplest terms, GIS software geocodes data using geographic components such as ZIP codes, street addresses, and latitude/longitude. “Any information that has a coordinate can be entered and plotted in GIS and then all accessory information can be added,” Rickard says. “For example, I can quickly show you on a map the location of all the grocery stores in North Carolina and when their leases expire. That's good information to have when part of your business is finding replacement grocery stores.
“Overall this system has helped me to target my customer base to the point where I am able to generate a 10 percent return on my direct mail pieces,” he says, a much higher return than the average 2.6 percent response rate determined by the Direct Mail Association.
In addition, the system allows Rickard to offer ancillary services. For example, “In the course of conversation with a residential housing developer, it came up that he had two miles of sewer service he needed to run to feed his new development still in the planning stages. In a matter of minutes, I was able to show him where the sewer mains were located, where he had to run his feed, and how many other parcels of land he had to run it through.”
In a commercial real estate market as active as the Charlotte-Mecklenburg County area, competition for land for a variety of uses is stiff, he adds. Yet Rickard estimates that his system has helped him sell nearly 900 acres of land for residential development in the last five months for nearly $2 million.
Learning the fundamentals is not for the faint of heart, he warns. “You go through mental torture to learn [how to create and access the system], but it has catapulted me far above the other brokers in my area working on residential land development and retail site selection.
“Over the past 10 years, I have probably invested close to $100,000 in software, hardware, and information, not to mention a number of hours learning how to use the system. Obviously it's not an easy learning curve, but the expense and time are worth it.”