What is Market and Feasibility Study Services?

What is Market and Feasibility Study? Most people put market and feasibility studies together, but they are two different entities and usually occur at different times in the development process. In general, market analysis looks for the intersection of supply and demand that will create a market for a product at a given price, and feasibility analysis. Test whether a particular product will meet certain financial or social goals in the marketplace. As Figure 1 shows, the market analysis is carried out early in the process, while the feasibility analysis is carried out after the initial design and during design refinement.

Figure

  • Real Estate Development Process
  • Inception Idea Not Worth it
  • Refinement of ideas Inappropriate
  • Market Analysis Inappropriate
  • Inappropriate project design
  • Feasibility study Not Eligible
  • Contract & rights
  • Not worth worthy
  • Development

Property management

Developers usually have some sense of the market when they are first considering a site or development concept. As entrepreneurs, they keep up with trends, watching other developers and looking for new niches to fill the market. Based on this knowledge, the developer will identify opportunities and create concepts to take advantage of those opportunities. This initial idea would make intuitive sense to developers, but a hunch isn’t a solid basis for investing thousands or even millions of dollars in construction.

Developers need more detailed information about the market before proceeding even to the initial design phase. This is where market analysis comes in. Market analysis helps developers answer a series of questions to refine project concepts. For example, a real estate developer wants to know the answers to the following questions:

  • What are the job trends in the market area?
  • What is the population growth rate in the market area?
  • What is the best unit configuration and size for the proposed development?
  • How many units can the market absorb, at what price and in how long?
  • What percentage of market demand will the project capture and why?
  • How should the unit be marketed to the target customer?
  • How much operating income or revenue can the project expect to generate in a given time?
  • What regulatory controls are placed on this type of development?
  • What is the community’s position on potential developments at the proposed site? (Miles, 11)

Other types of developers such as commercial and industrial builders will want to answer similar questions. This information is critical to proceeding with design, fundraising and finally marketing. Developers will share information with architects, engineers and landscape architects who will develop more refined site plans. The architect will use the information to decide on the type of building and amenities, the engineer will use the information to plan the infrastructure and the landscape architect will design how the building should be placed on the site.

The next step is a feasibility study. Based on the design, the developer will get construction and other project costs. The analyst conducting the feasibility study will test whether the expected revenues generated in the market analysis sufficiently exceed the expected costs. In most cases, the project is required to generate commissioners of dollar returns with the amount of risk involved to proceed.

feasibility-study

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In certain public projects, a policy decision may be made that the project’s contribution to society is more important than making money. For example, many communities build stadiums using debt financing such as bonds. Cities may not expect

To generate a return on their investment, but hope that the spin-off and residual effects of development will improve the general welfare of society. While feasibility studies should take into account other non-monetary risks and opportunities, for most developers and investors, the point is delivered in dollars and cents.

The next step is a feasibility study. Based on the design, the developer will get construction and other project costs. The analyst conducting the feasibility study will test whether the expected revenues generated in the market analysis sufficiently exceed the expected costs. In most cases, the project is required to generate commissioners of dollar returns with the amount of risk involved to proceed.

In certain public projects, a policy decision may be made that the project’s contribution to society is more important than making money. For example, many communities build stadiums using debt financing such as bonds. Cities may not expect

To generate a return on their investment, but hope that the spin-off and residual effects of development will improve the general welfare of society. While feasibility studies should take into account other non-monetary risks and opportunities, for most developers and investors, the point is delivered in dollars and cents.

If the feasibility study consultant is positive, the project can move forward. Developers will use this research to secure funding from investors and developers, contracts will be signed with builders, and marketing efforts will begin. If the feasibility study is negative, the developer may decide to leave the project despite having invested thousands in the research. Developers can also return to the design team and look for ways to make the project profitable. The development team can change the combination of amenities, increase density, get better loan interest rates or even completely switch development types. Developers and market analysts will engage in an information feed-back loop until all permits are obtained. At this point, it usually becomes too expensive to change the project.

It appears that market analysis is no longer necessary once construction begins, but a wealth of information can be used in marketing the project. Market analysis defines market segments and differentiates projects, two tasks required to target customers. To maintain pertinent information, research must be updated during the development process.

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