How to go about picking specific submarkets to develop Apartments?
Say you work for a multifamily developer and your deciding on which cities or submarkets within a city to source new sites. What's the best new way to determine that new supply is warranted in a certain area, while also determining what rental rates are the sweet spot in the market, or what rental rates are seeing a bunch of vacancy.
Are most developers just utilizing research from Yardi, REIS, etc, to look at absorption rates, and demand fundamentals, or are there more unique ways of doing this kind of research so that if your 3 years out from delivering to the market you feel your assumptions are healthy enough to warrant a strong lease up.
Any other type of research software any of you all use to project the absorption of future deliveries?
Hey Analyst 2 in RE - Comm, I'm the WSO Monkey Bot and I'm here since nobody responded to your thread! Bummer...could just be time of day or unlucky (or the question/topci is too vague or too specific). Maybe one of these topics will help:
More suggestions...
I hope those threads give you a bit more insight.
I would say, you start with a pool of "approved" markets you'll play in. How you decide which markets qualify can depend. The "economist" aspect often doesn't play nearly as large a role as you'd think. Believe me the development directors are not experts in econometrics and forecasting...but they ARE experts at knowing the right opportunity when presented. So that's usually how it transpires -- having a strong rolodex, getting the word out there for what type of deal you're looking for...and knowing the right opportunity when it comes along, and lastly being able to close it for the right price.
We use a combination of Axiometrics (for rents), and broker information on forecasted delivery schedules (supply pipeline). Usually the decision to invest is based on i) job data and anecdotal info about a specific intersection--is there strong job growth to support population growth; ii) Axiometrics rent info to verify untrended rents as justifiable; iii) a land price that makes sense and is at our below recent trades to confirm we are building at some kind of discount to replacement cost.
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