Six Step Market Analysis Process David E Wish
Introduction Student Introduction
Name
Academic Level
Real Estate Experience
What do you expect to get from this course?
Future Goals
Instructor Introduction
Course Syllabus Objectives
To develop an analytical approach to identifying and solving real estate problems
Course Coverage
techniques of real estate market analysis
development of market analysis theories
forecasting techniques
Prerequisites
Fin 351 or equivalent
Course Syllabus, con’t... Required Textbook
Market Analysis for Valuation Appraisals, Fanning, Grissom & Pearson
1st Edition
The Appraisal Institute
Course Project
Market Analysis of a Commercial or Residential Site
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• • • •
Group Project (3 to 4 students to a group)
Property of my choice
length approximately 30 to 50 pages including exhibits
presentation of ndings in class
Course Syllabus, con’t... Examinations
Type
50% Multiple Choice or True False
•
Closed Book, Closed Notes
50% Short Answer or Problems
• Open Book, Open Notes No Partial Credit
Calculators are permitted, computers are not
Make-up examinations are not permitted
Unless there an extraordinary circumstance
Market Analysis Market Analysis is the study of real estate market conditions for a speci c type of property
A Market Study
Macroeconomic Analysis that examines general market conditions of supply, demand, pricing, demographics of a speci c area or property type
A Marketability Study
Microeconomic study, examines the marketability of a given property or class of properties.
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Investment Analysis
Feasibility Analysis
Six Step Market Analysis Process
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Step 1: De ne the Product
(property productivity analysis)
Step 2: De ne Users of the Property
(market delineation)
Step 3: Forecast Demand Factors
Step 4: Inventory and Forecast Competitive Supply
Step 5: Analyze and Interaction of Supply and Demand
(residual demand study)
Step 6: Forecast Subject Capture
Levels of Market Analysis
Inferred Demand Studies
Level A
more descriptive than analytical
Level B
relies upon broad based surveys
Fundamental Demand Studies
Level C
employs fundamental forecasting techniques
Level D
use of primary research and surveys
Property Productivity Analysis
Site and Improvements
Site analysis
Legal and Regulatory
Zoning and General Plan constraints
Location
Linkages
Urban Growth
Highest and Best Use Decisions
Highest and Best Use Analysis
Land or Site as though vacant
Property as Improved
Systematic Approach to analysis
Legally Permissibility, Physically Possible, Financial Feasibility, Maximally Productive
Timing
Feasibility Rent
Population Forecasting De nitions of:
Projections (prediction)
Forecast
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Curve Fitting, then extrapolation
Six Alternative Curves
Forecasts using building permit data
Economic Base Analysis Use is to determine the concentration of an industry in a given place
De nitions of:
Economic Base
Development of Location Quotients
Types of Data utilized
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Basic versus non-basic employment
Sources of Demand Employment
Manufacturing
Services (O ce Users)
Population Growth
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Housing Units
Shopping
Shopping Centers
Types of Shopping Centers
Tenant Mix and Size
Trade Area
de ned in terms of:
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Primary, Secondary, Tertiary
Driving time
Total Sales
Market Analysis for Housing Market delineation to determine its components
Segment housing demand by:
housing type
ability to pay
Of ce Buildings Building Types
O ce Building Terms
Gross Building Area
Rentable Area
Rented Area
Net Occupied Space (Useable)
E ciency Ratio
Segment o ce demand by:
• type of o ce building
• location
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ie: CBD vs. Suburbs
Vacant Land
Physical and Legal determinants of use
access linkages
land use patterns and community growth
development of a land use plan including timing for potential development
Case Presentations and the Market Analysis Report
Case Presentations
3 to 4 students to a group
15 to 20 minute presentation of ndings
The Market Analysis Report
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Complete Self-Contained Format
30 to 50 pages
Thank You