MARKET ANALYSIS focuses on both a regional and neighbourhood evaluation, which includes the demographic conditions, geographic features, governmental prospective, existing real estate supply, potential future developments, and tenant/ resident demand. It is important to focus on how each of these elements impacts the subject property. For example, since employment growth can directly relate to demand for office space, it is important to understand if it is growing or shrinking. Similarly, since population growth can directly relate to apartment demand it is important to determine if it is increasing, decreasing or remaining stable. Actions by government can also impact all property types (i.e. office, residential, industrial, hotel and retail). Valuers should research if the government is promoting programs that enhance the quality of life in the area encourage economic development or improve transportation routes to relieve traffic congestion. Understanding the real estate supply is also important. The Valuer should determine the market’s current vacancy rate and its forecast. If it is growing, then that could indicate new construction. Significant new construction may lead to an over-supply of space and result in downward pressure on rental rates. These are all issues that pertain to market analysis.
Reference
Occupational & Professional Licensing Administration (2011). Study guide for Property Managers examination. Department of Consumer and Regulatory Affairs, District of Columbia.
