Supply & Demand Analysis
Our Supply and Demand Analysis can (1) reduce the risk inherent in any development project by measuring existing and projected supply and demand at the design stage, before construction costs are incurred; (2) assist the developer design a project that best addresses market demand; (3) identify “gaps” in supply (opportunities that have been overlooked by other developers).
Although the real estate adage “location, location, location” is true ... so too is the advice “timing is everything”. Misjudge your timing, fail to consider competing projects coming to market within the same time frame, or ignore market trends and the result is a development with unsold units, vacant space or the wrong unit mix. Markets in Atlantic Canada are “thin”, easily overwhelmed by excess supply. The result can be developments which, when they are completed, are too large for available demand.
Scope of Work
We undertake Supply and Demand Analysis on all types of real estate markets:
- Apartments (Rental)
- Apartments (Condominium)
- Hotels and Motels
- Housing Projects
- Restaurants and Fast Food Outlets
- Shopping Centres and Retail Outlets
Having defined, through consultation with our client, the scope of the assignment, we proceed through a sequence of research, analysis and recommendation.
In order to determine the optimum density, quantum and unit mix for a development on a specific site, it is necessary to measure competing supply and anticipated demand. Our Supply and Demand Analysis uses as its starting point, the Broad Market Area from which 80% or more of the demand and competitive supply will be drawn. We then narrow the focus to the community from which the project is expected to draw most (60% to 80%) of its demand, the Primary Trade Area. Within this Primary Trade Area we identify the Target Market having regard to the demographic, psychographic and fiscal profile of demand for the type of space to be created by the project. We analyse the size, unit mix, unit size and pricing of existing and proposed projects in the Primary Trade Area, and examine their Target Market. Utilising our Geographic Information System (GIS) and our CompuVal® information technology platform we access and layer the demographic, income, psychographic, property rental and sales data onto base maps for spatial analysis. We measure existing, and competing supply, calculate the Market Absorption Rate over the projected marketing period, determine surplus demand, and ascertain the project’s potential Market Penetration (the amount of surplus demand it is expected to capture). We provide clear and unequivocal recommendations to our client on the optimal project size, unit mix, unit size, pricing and anticipated marketing period.
Click here for our Economic Intelligence Unit products video, or review actual Supply and Demand Analysis case studies.