Market Analysis

Market analysis is one of the firm’s core service areas. We have conducted market studies for numerous sites, corridors, downtown areas, whole communities, or even multi-community study areas for both public and private sector clients. Market studies shape a development program for a site or larger study area in both urban and suburban contexts. In many cases, they are part of larger planning projects, in which the development program guides the physical concept plan to ensure that the plan is market-responsive.

The hallmark of our approach is a detailed analysis of both the demand and supply sides of the real estate market, and a reconciliation of this demand and supply to synthesize a detailed development program.  As a part of this analysis, we ascertain real estate market trends, competitive position, market niche and concept, absorption and pricing, physical development requirements, configuration and integration of uses and users, tenant mix and leasing parameters. We routinely deal with all major land uses, including residential (both for-sale and rental housing), retail, office, industrial, and business park uses.

Key aspects of our approach and capabilities by major land use follow:

Residential. Residential demand (for both rental and for-sale products) is fundamentally driven by household growth and associated shifts in age and income segments. Simply extrapolating past absorption trends can result in significant inaccuracies in the estimation of future demand.  Our analysis approach involves detailed analysis and segmentation of household projections by age and income to quantify future housing demand. For the supply side, we analyze competitive projects to size the level of competition in the market area, and gauge buyer or renter preferences, the supportable prices or rents, and the absorption pace that is achievable in the market.

Retail. We have the capability to conduct “Gravity Modeling” analysis: a sophisticated modeling technique that synthesizes market competition and consumer demand to estimate the sales potential of an anchor store, and assess whether the store would be feasible at a given location. Gravity modeling involves GIS-based spatial analysis to predict customer patronage at potential new anchor stores. Using this tool, we can forecast store sales based on factors such as travel times, location/size of market competitors, and the spatial distribution of income of households and their spending patterns. SB Friedman also maintains a proprietary database of the tenancies and anchor uses in downtown/town center districts that allows us to compare any downtown or commercial district with analogous downtowns and uncover under-represented retail categories that could be potentially targeted.

Office. Because of the firm’s subscription and access to licensed databases including Costar and REIS (property-level commercial databases), we are able to quickly create detailed profiles of the competitive supply by submarket, and assess time series trends for key market variables, including absorption, occupancy levels and rents. Demand for office space is driven primarily by employment growth in specific office-related economic sectors and the amount of office space needed per employee. Based on past relationships between office-related employment, occupied office space, rent levels and future employment projections, we prepare future demand projections for office space.

Industrial/Business Park Uses. Unlike office space demand, industrial/business park demand is not primarily driven by employment. Industrial space needs are more dependent on the production and storage of goods. We use Gross Regional Product (GRP), which measures the output of goods produced by industrial sector, to forecast industrial space demand. In addition, we conduct target sector analyses to identify economic sectors that over the long term are likely to generate growth, demand real estate, and provide jobs for a submarket or region. This allows local/regional economic development staff to target specific types of businesses and firms for marketing purposes.