Market Studies

We complete market studies for various purposes. A typical scenario where a market study would be requested is when a private entity or quasi-governmental entity applies for federal or state development subsidies.

A market study will follow specific requirements for a given project, though some general inclusions in the report would be:

Definition of the problem the market study seeks to answer, specifically addressing the population to be served. In almost all cases, the problem will be whether sufficient potential demand exists for the development as proposed. Potential demand is the pool of households that are income qualified (household income does not exceed applicable program limits) and can afford the proposed development’s rents.

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 description may be based upon a review of the development, the developer’s description, or taken from the blueprints. 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, at a minimum, will  provide the number of persons employed in the market area currently and as of the last census with employment broken out by categories as well as data on the unemployment rate currently and as of the last census, projected future employment in the market area and 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, household and income will be analyzed.

Supply Analysis for both current and potential, of 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. Some topics are housing conditions of existing developments with description of existing and planned developments, number of units, unit mix (i.e., number of 1, 2, and 3-bedrooms and baths), average rents by number of bedrooms and baths, vacancy by number of bedrooms (existing developments only), and federal assistance and subsidies available by type (i.e., section 8)

Demand Analysis to articulate anticipated demand for the development and for competing housing in the market area. In some instances, this will overlap with information required in the demographic summary. We will estimate the potential pool of households within the market area the number of age, income, and rent qualified households that will create the effective demand and expected change in that number over the next five to ten years, average size of the potential renter households and the expected change in that number over the next five to ten years. The study will document the number of rental vouchers and/or certificates that are available and used in the community. If waiting lists for developments with vouchers and/or certificates are available, indicate the number of persons on the list(s) along with the frequency with which the waiting lists are updated, and special-needs populations

Reconciliation of Supply and Demand with an overall vacancy rate for competitive housing in the market area; a vacancy rate, by number of bedrooms, for competitive multifamily housing in the area; the expected demand for units; an estimated absorption rate (units rented per month/year) for the development overall and by number of bedrooms; and

The penetration rate (development units divided by qualified households) for the development overall. In every instance, all data sources and calculations used in arriving at the above results must be shown in their entirety in the market study. Any assumptions used to derive any of the above rates would be explained within the study and supported by verifiable data.

A summary of Conclusions for reconciliation of supply and demand, and a recommendation  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, as proposed, 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 to the end user, it will be reviewed to ensure minimum standards set forth are met. If the minimum standards are not met, we would typically be advised of the deficiencies and given an opportunity to correct those deficiencies. If the minimum standards are met in a logical, reasonable and supportable manner, then the market probably exists for the proposed development. If it is not clear from reviewing the study, that such a market probably exists, the reviewer would make reasonable efforts to look at the data contained within the market study and determine whether such a market probably exists. 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.