Posted by Mike Acken
Conducting research and assessing real estate investment opportunities is no easy task. Whether you’re evaluating an investment space for retail, commercial, industrial or hospitality use, it’s important to consider all of the social and economic factors in a given area in order to make an educated investment.
One emerging tool that real estate firms are turning to for help in guiding investment decisions is location data and intelligence. Location Intelligence can provide granular insights on venues as well as foot traffic trends surrounding those venues and the behaviors and demographics of visitors. These insights are hard to garner from other data sources, as those sources don’t typically derive from accurate foot traffic analysis or real-world actions.
For more information on location intelligence, read this post 'The Nuts and Bolts of Location Intelligence.'
Here’s how real estate firms are leveraging Location Intelligence:
Location Intelligence can produce privacy-protecting insights into consumer demographics by homing and cross referencing anonymized devices to census block groups. With this information, we can see what the typical demographic is in an area that in which an investment is being consider. Incorporating commercial real estate demographics into your existing real estate market data and analytics set can then help ensure that any investments are directed to an area that matches the wants and needs of the investors.
Understanding consumer demographics is only part of the equation in real estate decision making. Incorporating foot traffic analysis into the overall strategy also enables a better understanding of where target consumers visit most frequently and analyze trends and patterns of movement around specific areas of interest. For instance, if an investor were interested in a particular shopping plaza, historical location data and analysis can help to uncover the number of visitors, length of visit, time of visit, demographic information, and how many times consumers visit the plaza.
Using location intelligence, real estate firms can go beyond general population data and find areas where there are an adequate number of potential consumers with ideal shopping behaviors. Investing in an area where target consumers already visit and shop ensures the right kind of foot traffic and sets that investment up for success.
Location Intelligence also enables real estate firms to spot neighborhood trends ahead of the curve in order to know whether or not to invest in an area before anyone else. For instance, location intelligence can help detect if a neighborhood is starting to gentrify; conversely, if area trends are not consistent with the investment thesis or if foot traffic patterns suggest lower consumer visit rates, an investor might be able to sell out of their investment while the market is still good. Most of the other data sources that firms are using to garner this information has a long lag time. It's often too late by the time the report comes in, which competitors also get their hands on. Location data is practically real-time and enables firms to act fast and early.
By understanding the ebbs and flows of the people who live and shop in given neighborhoods, firms can also ensure that they are leasing property to the stores that match that neighborhoods shopper profiles. This will ensure greater success for the store -- and accordingly less likely turnover for the landlord.
Another capability of Location Intelligence is conducting real estate competitor analysis by geofencing and monitoring competitors’ locations to get a relative sense of consumer foot traffic patterns and loyalty levels. For example, you may discover a popular competitor’s location and decide to invest in a property nearby to capitalize on some of that foot traffic and win those dollars for your own business.
Real estate firms are beginning to uncover the real value that Location Intelligence can provide to assist in making educated real estate investment decisions. By leveraging this data, firms can amplify their due diligence efforts to ensure that they are investing in an area that checks all of the boxes with no surprises. So, if you’re a real estate investor and want to be at the forefront of your industry and stay ahead of the game, it might be a good time to ask what location intelligence can do for you.
Want to learn more about Location Intelligence? Contact us or download the white paper below: