Using Data to Create a Bid Rent Surface

Taking seriously the oldest known cliché in real estate, “Location, Location, Location”, the real estate professional in the 21^st Century should be prepared to create an economic topographical map. Using data one can develop information about the direction of growth (known as the path of progress) and the rate at which rent decays in all directions away from an economic “central place”. Such a map would look like the one to the left. On this map the shallowest slope of rent decay away from the center is the direction of high rent persistence.

The smaller outgrowth of high rent a short distance from the central place indicates an attractive sub-area that, if the geographic region is large enough, may be what is sometimes called an “edge city”.

This analysis supplements the “driving around” or “windshield” methods of location selection, adding an objective element to site selection based on data.