LOCATION, Location, location — a variety of meanings (2024)

In the world of real estate, one rule is crystal clear: location is everything. It determines the value and liquidity of a property. Nothing could be more important.

But what does location really mean? Is there just one common understanding of location, or there are many of them?

We identify at least 3 very different understandings of location:

1️⃣ Locality, or community. It is a traditional subject for real estate underwriters — the more data they manage to collect about locality the better (economy, socio-demographics, crime, etc.). They look at locality as just another external risk factor for the real estate property besides macroeconomic risks.

2️⃣ Catchment area. This interpretation is absolutely different from the first one. It makes location an internal characteristic of the property, a source of the property’s tenant composition. Catchment area is always function-specific, there is no such thing as a universal catchment area. For the tenants colocated in a property their catchment areas will differ in size and commercial potential depending on tenants' business profile (one for small grocery store, another one for the hotel). The catchment areas do not conform to locality, and they are defined by travel time.

3️⃣ GeoPosition. It could be a land plot, postal code, street address, or lat/long coordinates. Technically it is a very important part of spatial grid in the GIS data platform, making accurate data management possible.

💡 Our take is similar to the second interpretation: we interpret tenant composition of a property as a function of their respective catchment areas. See the explanation of catchment area analysis and Location Risk Scoring in Habidatum Data Dictionary (p12).

Which definition of location makes the most sense to you? Or do you see it differently? We'd love to hear your thoughts and have a discussion!