Definition of "Location analysis"
Location Analysis is the appraisal of a general geographic area for a particular use.
A Residential Real Estate Market professional (or consumer) rarely deals with a Location Analysis in connection with a sale, as they are usually done in the Commercial Real Estate Market and the Industrial Real Estate Market. But a Real Estate Agent might consider a smaller version of Location Analysis - sometimes done on his own, without the help of an appraiser - for self-improvement purposes, in an effort to generate a better Market Analysis.
Let’s see an example of Location Analysis:
A big industry is interested in opening an office (or a plant, or a huge store…) in a location within a general geographic area (which may be several hundred square miles in size). They like that area, but need to understand if it is the right place for such a large investment on their part. They order a Location Analysis so they can make the final decision with confidence.
A good Location Analysis must consider factors like:
- Business climate. The area of a growing market. What are its outstanding commercial and industrial features?
- Demographic data. Size of the population, its growth rate, composition in terms of age, family size, and educational attainment.
- Geographic features. What topographical features does the location have? What is theclimate like?
- Income. Personal and family income is an important consideration in determining a good fit with other requirements.
- Markets. What commercial markets does the area have? What are their features and size? What are the consumer markets like?
- Infrastructure. How is the transportation system in the area? Does it have easy access to major highways, availability of airports, air services and railways? What about its power grid and internet service? Generally how fast and secure are those services there?
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