We are all familiar with the basic real estate concept that the location of a property is a very important factor to help determine the price and general value of a given property.
The question, now, given a few recent developments worldwide, is whether the adage: Location, Location, Location[1] should be given the same weight in the valuation/appraisal process as this factor has been given over the last many decades.
In a recent article, we examined this issue of location and how it has been impacted by two very important developments:
Driverless Vehicles (DV) and Virtual Communications.
As for DV, it is well established that the distance issue, such as the distance of an employee moving from the employee’s home to the employee’s place of work has been and continues to be impacted by transportation. That is if transportation is available from the home to the office, and vice versa, this distance issue will impact employees and their employers. If the transportation is by means of rapid transit trains, busses, other means, or use of a personal vehicle, these modes of transport are very important for the decisions made by an employee as to where to work and where to live. Such transport is also important for the employer, which employer recognizes the need to be present at a location that supports the hiring and retaining of good employees. Of course, location is also important for other purposes, such as meetings, delivery of goods and services, etc. In turn, the better the alternatives for transportation, the more options there may be for the choice of the location.
These variables in the location choice, influenced by transportation, often include issues regarding safety, costs, convenience, time, and other matters.
Applying the methods and alternatives available for transportation to the choices of a location becomes very important to the employee/worker and the employer. If for example, because of the automobile, the employee has more acceptable choices as to where to live in relation to the worksite, the availability of the auto is important. Applying this reasoning to the location issue, if the area for an acceptable location is broader and more flexible, because of an invention such as a DV, this is very relevant to the location chosen by the employer and the employee.
The use of the DV is coming on strong with the local and international settings. If an employee can choose a favorable home site that is acceptable, even considering the additional distance, the issue of a DV is very relevant to the location issue. This is, of course, also true for the employer choosing the worksite. With the new developments as to DV, such as Apple announcing that it will have fully DV available in 2025,[2] the choice of a location will be impacted, as it was when the automobile came on the scene and allowed for locations that would not have been considered as “acceptable” by workers or employers, prior to the invention and application of the auto in everyday life.
Not only is the DV applicable and being developed for personal transportation, but the DV is being developed at warp speed for use in trucking goods[3], delivery of food products, etc.
Thus, the DV is impacting location.
The second big development, noted above, that impacts location is the use of Virtual Communications (VC). There is no question that the spread of COVID-19 and the need to work from a distance has been very much an issue to permit and support employees and workers undertaking their activity of work from home or otherwise away from the main office. The use of virtual meetings, via Zoom, Google, or other alternatives, has been common in business settings, teaching in schools, and otherwise communicating from a distance. The COVID-19 (and variants) issue remains; thus, the distance and communication concerns remain important.
How significant is this VC factor in choosing a location? Clearly, in the last 2+ years, employees and independent contractors, in working with employers and other parties in business, have recognized that a good deal of work can be undertaken from a physical distance, because of the application of the technology of distance communications, i.e., VC. Such VC has proven to the workforce, among others, that the location required of proximity to a main worksite has been modified. This does not mean a main office, person-to-person meetings, and other direct and non-VC are not important. But it does prove that many positions to locations that were considered fundamental and crucial to a work environment need to be reconsidered in many settings. Not all settings will support the distance position. Obviously, personal service issues, such as surgery, must be at a given location in most settings. Yet, a large amount of work can be produced at a distance. Meetings that were daily meetings may now be meetings of once or twice a week.
These changes mean that the value of a given location may also be changing or at least modified and possibly expanded. An employee, who need only be in the office one day a week, may find that they will now consider a location that is a greater distance from the main office. The amenities that might be gained by the employee, because of this distance modification, may be very valuable. The price of a property to a buyer may be reduced by traveling an additional distance, such as another one-half hour. More amenities of the location for the home may be gained because of the additional distance. Hence, the location issue is impacted by this VC alternative.
Look for more on this issue as our full article on this subject is released. If you are interested in this full article, send us an email and we can send you the citation for this publication.
Happy Holidays!
Professor Mark Lee Levine,
University of Denver
[1] The Appraisal of Real Estate, published by The Appraisal Institute, Chapter 3, (Chicago 20--). https://appraisaltoday.com/2021/09/03/location-location-location-in-apprais; https://www.investopedia.com/financial-edge/0410/the-5-factors-of-a-good-location.aspx; https://www.nar.realtor/sites/default/files/migration_files/A-Guide-to-Understanding-Residential-Appraisal-03-28-13.pdf [2] Self-Driving Apple Car Could Finally Roll Off The Lot In 2025 Sans Steering Wheel Or Pedals | HotHardware; Apple shares hit record, plans build self-driving car as soon as 2025 (cnbc.com)
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