A market feasibility study determines the depth of support and current market conditions for a specific property in its Primary Market Area (PMA). A market study supply analysis takes into account variables including unit mixes, vacancy levels, rents, sizes, bathrooms, amenities, condition, location, and target market, and analyzes these variables against a potential or existing apartment development. Additionally, a market study demand analysis focuses on determining the required capture and penetration rates for a development among age and income-appropriate households and comparing those figures to local and national figures to determine potential feasibility.
A market study differs from an appraisal in that a market study determines support for a property, whereas an appraisal determines value. Some lenders and finance agencies may require a market study as due diligence to assure a property’s potential for success in a market. This is particularly true for multifamily properties where numerous factors, such as the number of income-qualified households and proposed rent levels, directly influence a property’s potential to lease-up and maintain a high stabilized occupancy rate.
Specialty Valuation Group conducts market feasibility studies for all types of commercial and residential real estate development in local real estate markets nationwide. A high-quality and thorough market study may be one of the best investments a developer can make in developing a property, as it presents an opportunity to identify ways in which a property can maximize its return on investment. We carefully review the market conditions and trends and translate information into recommendations that will make a property more competitive. Further, the market study may identify sites or markets where demand may not be sufficient to support a project, and may potentially save a developer or investor from a poor investment.