This week, I’ve been in CCIM CI 102 class and learning more about market analysis. This process is incredibly comprehensive and tedious (so much so that the class was four full days just for this topic).
But, in a nutshell, the process of strategic analysis for a commercial property (industrial, retail, office, or residential/apartment) would include the following:
- Market feasibility
- Supply and demand (gap analysis)
- Economic base analysis
- Shift-share analysis
- Real estate cycle analysis
- Location and site feasibility – consists of a site inspection that focuses on all aspects of the subject property and its particular location
- Political and legal feasibility – consists of an investigation of the zoning ordinance, subdivision regulations, exactions, impact fees, construction codes, development incentives, and any other legal or regulatory item that impacts the subject property and the market in which it competes.
- Financial feasibility – consists of determining revenues, expenses, financing, construction costs, capitalization (cap) rates, and other financial information that affects the profitability and the rate of return to an investment in the subject property.