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Position based routing has been an attractive area of research due to being scalable and efficient in packet routing in mobile ad-hoc and sensor networks. A source node willing to send a packet to destination uses location service that provides the destination's approximate location. Most of the location service schemes in literature focused only on making the services scalable on location maintenance and query, but little importance was given on their suitability to deploy in practical environment. Real world scenario is most likely to have various obstacles such as buildings, vegetations, fields and playground that may play a vital role in the performance of geographic routing protocols as well as location services since those areas may have no or very low node density available. No study has yet been done evaluating the influence of obstacles on location services' performance. In this paper, we investigated and analyzed the impact of obstacles on scalable location service measured in terms of widely used performance metrics. This study also reveals how transmission distance holds greater impact on performance when obstacles are present.