Market StudiesMarket studies are completed for a variety of reasons. For example, a market study would be requested when a private or public entity applies for state or federal development subsidies.
Each market study follows specific guidelines, although all studies include the following:
An outline of the problem the market study seeks to solve, specifically addressing the population to be served. In almost all cases, the question posed is whether sufficient demand exists for the development.
Definition of the market area(s) in which similar properties compete with the subject property for tenants or buyers.
Analysis of physical attributes and location, including a description of the development site, development improvements, development amenities, units, and unit amenities. The study will describe those attributes and amenities that set the development apart from its competitors and that will enhance or detract from the development’s marketability.
Description of public services, infrastructure and linkages available to the development. Linkages are the location and relationship of the services, institutions, and businesses which are likely to be important to the development’s residents.
Economic Analysis and overview of the market area’s economic base. The economic analysis will provide the number of persons employed in the market area currently and as of the last census. Employment figures are broken out by category. It will include data on the current unemployment rate and projected future employment in the market area. It will include a survey of major employers in the area.
A demographic summary of information will be provided for three points in time: the most recent census, the current year, and a calendar year between three and five years in the future. Within these time frames population, and household income will be analyzed.
Supply Analysis for both current and potential competing developments within the market area. This will address existing multifamily developments, planned multifamily developments, and land zoned for multifamily uses in close proximity to proposed project site. Housing conditions of existing developments and a description of existing and planned developments will be included.
Demand Analysis to articulate anticipated demand for the development and for competing housing in the market area.
Reconciliation of Supply and Demand with an overall vacancy rate for competitive housing in the market area.
A Summary of Conclusions for reconciliation of supply and demand, and a recommendation about whether the proposed development is feasible from a market perspective and whether a market exists for the development as proposed in the application for tax credits. If the analyst does not believe that the development is feasible, the analyst must indicate what modifications would be needed to make the development feasible (i.e., phased construction, fewer units, different mix of units, different market niche). If the analyst does not believe that the proposed development, even with modifications, is feasible, the analyst should indicate that in the study and should state why.
When a market study is delivered, it will be reviewed to ensure minimum standards set forth are met. If it is not evident from a reasonable review and interpretation of the data that a market exists, the study and application would be rejected. The final document reiterates minimum standards and reflects the scope of work for the assignment, data, analysis and conclusions