Factors affecting the location of real estate

Abstract

Purpose

The purpose of this paper is to identify and systematise the factors in selecting a location for various real estate types (especially industrial, housing, retail, and office).

Design/methodology/approach

Following an extensive literature review, this paper analyses numerous factors and conditions to describe the decision‐making process in locating various real estate types. Relevant literature from 1956 to 2012 was systematically collected and classified on the basis of structural attributes such as problem context (location and its meaning), methodology, and the general and site location factors considered. The literature also was categorized according to the geographic region and year of publication. A structured literature review analyses published studies, evaluates contributions, summarises knowledge and identifies managerial implications and lines for further research.

Findings

The ultimate location and site selection for real estate are based on a combination of various factors and criteria. The determinants that entities may evaluate when locating a business most typically depend on the industry and the nature of the enterprise. Depending on the enterprise and its operations, some location decisions are absolutely dependent on specific location parameters; others may not be subjected to such constraints, but must meet conditions the investor considers important (location advantages). Furthermore, location determinants are not constant, but change over time according to changes in local law, regulations, and/or market conditions. Over the past few decades, a growing number of new factors have emerged that decision makers and researchers previously ignored, such as freedom from pollution, employees' quality of life, and so on. Still other businesses consider relocation when cost factors lower their competitiveness.

Research limitations/implications

The identification and classification of factors affecting location of real estate primarily systematises the existing knowledge and provides a starting point for further research on optimising real estate location from a company value‐management perspective. At this stage, the research does not constitute a basis to rank to individual factors.

Practical implications

This paper can be a resource for corporate real estate managers, offering guidelines for making decisions on the best location for various types of real estate. The findings of this literature review may also help leaders anticipate potential location barriers and follow best practices for addressing these impediments.

Originality/value

This paper summarises knowledge and provides the first systematic review of literature related to factors affecting the choice of location for real estate. Most papers focus on microeconomic factors of different real estate types. A need was identified for a detailed comparison of all factors (also macro) affecting general and site location decisions, indicating how decisions have changed over time. This review fills this gap in the literature, provides some managerial implications, and identifies areas for more detailed research on different segments of the real estate market.

Citation

Rymarzak, M. and Siemińska, E. (2012), "Factors affecting the location of real estate", Journal of Corporate Real Estate, Vol. 14 No. 4, pp. 214-225. https://doi.org/10.1108/JCRE-11-2012-0027