System and method for evaluating real estate

• US 5,680,305 A
• Filed: 02/16/1995
• Issued: 10/21/1997
• Est. Priority Date: 02/16/1995
• Status: Expired due to Fees

• Current Assignee: Mahlon Apgar IV
• Original Assignee: Mahlon Apgar IV
• Inventors: Apgar, Mahlon IV
• Primary Examiner(s): Hayes, Gail O.
• Assistant Examiner(s): SHINGALA, GITA
• Application Number:
  US08/389,920
• Time in Patent Office: 978 Days
• Field of Search: 364/401 R, 364/402, 364/408
• US Class Current: 705/7.28
• CPC Class Codes: G06Q 10/0635 Risk analysis of enterprise or organisation activities
• CPC Class Codes: G06Q 10/06375 Prediction of business process outcome or impact based on a proposed change
• CPC Class Codes: G06Q 30/0201 Market modelling; Market analysis; Collecting market data
• CPC Class Codes: G06Q 30/0202 Market predictions or forecasting for commercial activities
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03

Abstract

Systems and methods of the invention provide objective evaluations of a business entity'"'"'s real estate situation and condition for use by customers including (but not limited to) the business entity. Information is processed to determine indicators of amount, price, area, grade, and risk; and those indicators are combined to provide a total score. The system includes a database for storing a variety of data, such as utilization measures and business information, and data corresponding to businesses which are similar to the business entity. Process actuators process the information to derive the several indicators, the score, and other measures, which is printed or displayed for customers and/or the business entity. Preferably, a report is generated which details information including the score to provide a well-rounded picture of a particular real estate situation.

Claims

1. A method for evaluating real estate for use by a Business Entity, comprising the steps of:

storing utilization information about the real estate in a database, the utilization information including (i) square footage data representing a square footage of the real estate, (ii) data characterizing the selected use of the real estate, (iii) cost data including a rental price of the real estate, (iv) data about the number of the Business Entity'"'"'s employees in the real estate, and (v) data about the sales or revenue of the Business Entity in the real estate,

storing data representing utilization values in the database from business entities which are similar to the Business Entity,

determining a utilization indicator of the real estate by processing information in the database, the utilization indicator having a numerical representation and being a function of (i) the square footage, (ii) the selected use, (iii) the cost data including the rental price, (iv) the employee data, and (v) the sales data,

processing the numerical representation to produce a score representing a quantitative evaluation of the real estate,

generating a report that includes the score, and

displaying the report for use by the Business Entity.

2. A method according to claim 1 wherein the real estate comprises one of (i) a single location occupied by the Business Entity, and (ii) multiple locations occupied by the Business Entity.

3. A method according to claim 1, further comprising the steps of:

extracting from a business database space utilization data records of other business entities having a standard industrial classification code that is similar to the Business Entity'"'"'s standard industrial classification code, each of the space utilization data records including information representing at least one of (i) a square footage of real estate occupied by one of the other business entities, (ii) a number of employees of one of the other business entities in the real estate, and (iii) sales or revenue of the Business Entity in the real estate,

determining space utilization values from the extracted space utilization data records by calculating at least one of a (i) square footage per employee of the Business Entity in the real estate; and

(ii) a sales or revenue per square foot of the Business Entity in the real estate,

determining an average and standard deviation for the space utilization values,

determining a variance between a space utilization value of the Business Entity in the real estate and the average space utilization values, and

assigning a value to the indicator based upon a comparison between the variance and the standard deviation.

4. A method according to claim 1 wherein the step of determining a utilization indicator comprised the step of determining the utilization indicator on a periodic basis.

5. A method according to claim 1, further comprising the steps of:

extracting from a business database cost utilization data records of the other business entities which have one of (i) a standard industrial classification code that is similar to the Business Entity'"'"'s standard industrial classification code, and (ii) a location with a real estate submarket that is similar to a submarket of the Business Entity, each of the cost utilization data records including information representing at least one of (i) a number of employees occupying real estate of the business entities, (ii) a square footage of the real estate, (iii) rental costs of the real estate, and (iv) sales or revenue of the business entities in the real estate,

determining cost utilization values from the extracted cost data records by calculating at least one of a (i) rental price per square foot of the real estate, (ii) rental price per employee of the real estate, and (iii) sales or revenue of the other business entities in the real estate per rental price of the real estate,

determining an average and standard deviation for the cost utilization values,

determining a variance between a cost utilization value of the business entity and the average cost values of the similar business entities, and

assigning a value to the indicator based upon a comparison between the variance and the standard deviation.

6. A method according to claim 1, further comprising the steps of (i) determining a grade indicator of the real estate, the grade indicator having a numerical representation and being a function of (i) a classification system of the real estate that is consistent with accepted standards, and (ii) application of that system to buildings occupied by the business entities which are similar to the Business Entity, the grade indicator thereby providing a numerical representation of the quality of the real estate, and (ii) processing the grade indicator with the numerical representation of the utilization indicator to produce the score.

7. A method according to claim 6 wherein the classification system comprises a numerical representation of the property grades.

8. A method according to claim 6 wherein the step of determining a grade indicator comprises the further steps of (i) extracting from a data source, location data records of the business entities which have a standard industrial classification code that is similar to the Business Entity'"'"'s standard industrial classification code, and (ii) storing the location data records on the database.

9. A method according to claim 6, further comprising the step of assigning a classification to the buildings based upon at least one of the following:

(i) a building grade as reported by experts familiar with classification systems and generally accepted standards, (ii) an age of the building, and/or (iii) an extrapolation of comparable buildings.

10. A method according to claim 6 wherein the step of determining a grade indicator comprises the further step of assigning grade classifications to the buildings.

11. A method according to claim 10 wherein the step assigning grade classifications comprises the further step of assigning a range of numerical values to the buildings based on the assessed grade of the buildings.

12. A method according to claim 6, further comprising the steps of determining an average and standard deviation for the grade classifications,

determining a variance between the grade classification of the Business Entity'"'"'s real estate and the average grade classifications of the real estate of the similar entities, and

assigning a value to the grade indicator based upon a comparison between the variance and the standard deviation.

13. A method according to claim 1, further comprising the steps of (A) determining an area indicator of the real estate, the area indicator having a numerical representation and being a function of at least one of (i) rents, (ii) vacancy, and (iii) absorption rates for each of the Business Entity'"'"'s submarket and nearby submarkets, and (iv) other indicators of submarket and location attractiveness, the area indicator thereby being a measure of the attractiveness of the real estate, and (B) processing the area indicator with the utilization indicator to produce the score.

14. A method according to claim 13 wherein the step of determining an area indicator comprises the further steps of defining a list of submarkets, extracting from a real estate market database, for each of the submarkets, at least one of the following submarket values:

(i) rents, (ii) a vacancy rate, and (iii) an annual absorption rate;

calculating submarket rankings for the submarkets based upon the submarket'"'"'s values compared with other submarkets within the same market, and

developing a submarket ranking for the location of the real estate.

15. A method according to claim 13, further comprising the step of assigning a value to the area indicator based upon a comparison between the Business Entity'"'"'s submarket and nearby submarkets.

16. A method according to claim 1, further comprising the step of determining a risk indicator of the real estate, the risk indicator having a numerical representation of a financial, market, and environmental exposure of the real estate, the risk indicator being a function of at least one of (i) a building age, (ii) a presence of asbestos, (iii) a presence of toxic waste sites and/or other man-made environmental hazards, (iv) a presence of a naturally occurring environmental hazard, (v) a presence of financial obligations and encumberances of the Business Entity for the real estate, (vi) a tenancy status and/or remaining time before a financial obligation of the Business Entity for the real estate, is terminated;

and/or other measures of financial, market and environmental risks, as defined by industry, professional and/or governmental organizations and generally accepted in industry or professional practice.

17. A method according to claim 16, further comprising the step of evaluating at least one of the following:

(i) an age of the real estate, (ii) a risk of exposure to asbestos in the real estate (iii) a proximity of one or more toxic waste sites to the real estate, (iv) a proximity of one or more naturally occurring environmental hazards to the real estate, (v) any remaining financial obligations and encumberances of the Business Entity for the real estate, (vi) any tenancy status of the Business Entity for the real estate, (vii) other measures that indicate potential health and safety risks for occupants of the real estate, and financial and market risks of the Business Entity for the real estate.

18. Apparatus for evaluating selected real estate for a selected use by a Business Entity, comprising:

a database for storing information about the real estate and about comparable real estate properties of business entities which are similar to the Business Entity, the database comprising

means for storing space utilization information, including (i) square footage data representing a square footage of the real estate, (ii) data characterizing the selected use, (iii) data about the number of employees in the real estate, and (iv) data about the sales or revenues of the Business Entity in the real estate,

means for storing cost utilization information, including (i) the square footage data, (ii) the data characterizing the selected use, (iii) rental data representing a rental price of the real estate, (iv) data about the number of employees in the real estate, and (v) data about the sales or revenues of the Business Entity in the real estate,

means for storing comparable real estate information, including (i) space utilization data values and (ii) cost utilization data values of the comparable real estate,

means for storing building classification information, including (i) a data classification of the real estate that is consistent with generally accepted standards, and (ii) data classifications, consistent with generally accepted standards, of buildings of the comparable real estate,

means for storing area information, including (i) rent data, (ii) vacancy data, (iii) absorption rate data, and (iv) area information data of the business entities, and

means for storing financial, market and environmental risk information, including (i) data representing an age of the real estate, (ii) data representing locations of man made and naturally occurring environmental hazards, (iii) data representing remaining financial obligations and encumbrances of the Business Entity for the real estate, and (iv) data representing the financial-obligations and tenancy status of the Business Entity in the real estate, (v) tenancy status and/or remaining time before a financial obligation of the Business Entity for the real estate, is terminated; and

/or other measures of financial, market and environmental risks, as defined by industry, professional and/or governmental organizations and generally accepted in industry or professional practice,

processor means for determining numerical indicators of the real estate by processing information in the database, the numerical indicators including a space utilization indicator, a cost utilization indicator, a grade indicator, an area indicator, and a risk indicator, the processor means comprising

means for processing the space utilization indicator as a numerical representation and as a function of (i) the square footage data, (ii) the usage data, (iii) the employee data, (iv) the sales or revenue data, (v) the space utilization data values, and

means for processing the cost indicator as a numerical representation and as a function of (i) the square footage data, (ii) the rental data, (iii) the usage data, (iv) the employee data, (v) the sales or revenue data, and (vi) the cost data values,

means for processing the grade indicator as a numerical representation and as a function of (i) the data classification, and (ii) the data classifications,

means for processing the area indicator as a numerical representation and as a function of (i) the rent data, (ii) the vacancy data, (iii) the absorption rate data, (iv) the area information data, and (v) transportation, infrastructure and demographic data,

means for processing the risk indicator as a numerical representation and as a function of (i) the building age data, (ii) the man-made and naturally occurring environmental hazard location data, (iii) the data about remaining financial obligations and encumbrance of the business entities for the real estate, and (iv) the data about the tenancy status and remaining time of financial obligations of the business entities in the real estate,

means for combining the indicators to produce an overall score representing a quantitative evaluation of the Business Entity'"'"'s real estate condition, and to produce a report including the score and analytical information about the Business Entity'"'"'s real estate, and

display means for displaying the report to the Customer.

19. A system for providing real estate and facilities information to a Customer that uses, leases, buys, sells, owns, manages, consults on, and/or advises on real estate, comprising:

a database for storing information about a Business Entity and the Business Entity'"'"'s real estate and about comparable real estate of business entities which are similar to the Business Entity, the information comprising space utilization and cost utilization information about the real estate and about the comparable real estate,

processing means for analyzing the information the processing means providing an overall score based upon an evaluation of the information, and generating a report that includes the score and a quantitative evaluation of the Business Entity'"'"'s real estate condition; and

means for providing a print-out of the report.

20. A system according to claim 19, further comprising display means for outputting data and analytical information about the Business Entity'"'"'s real estate;

the display means displaying the report, the report further including a name of the Business Entity, and at least one of the following;

(i) a portion of the data on the Business Entity and the Business Entity'"'"'s real estate, (ii) real estate ratios representing the analyzed data, (iii) graphs of data comparing the Business Entity'"'"'s real estate to industry averages based on similar standard industrial classification codes, and (iv) information describing the outputted data and analytical information to a Customer of the system.

21. A system according to claim 20, wherein the report further includes a name of a real estate submarket, and at least one of the following:

(i) a total square feet for each of the different types and uses of the real estate in the submarket, (ii) vacancy rates for each of the different types and uses of the real estate in the submarket, (iii) absorption rates for each of the different types and uses of real estate in the submarket, (iv) rents for each of the different types and uses of real estate in the submarket, (v) terms of recent facility relocations and/or transactions for selected occupants and locations in the real estate submarket, and (vi) a list of real estate locations available for lease or sale in the real estate submarket.

22. A system according to claim 20, further comprising means for generating reports and related products that provide the following decision support tools:

(i) self analysis and comparison tools, (ii) market and submarket data reports, (iii) available space reports, maps and commercial listing services, (iv) comparable real estate transactions lists and maps, (v) customer development tools, including lease aging profiles and lease aging lists, (vi) computer software, including staff, space and least negotiation models, and software for self analysis, (vii) manulas and printed reference materials, and future and derivative products.