Real Estate Fundamentals
When discussing the real estate fundamentals of a deal or of a region as a whole, what exactly is this referring to?
When discussing the real estate fundamentals of a deal or of a region as a whole, what exactly is this referring to?
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Fundamentals of a deal, refers to the supply/demand and market-driven factors that inform the investment thesis behind the deal. i.e. no Class A product had been delivered in 20 years, and a drastic shift in the local economic development committee now allowed them to offer incentives to relocating companies that were previously unheard of. Vacancy rates were at an all time low, and so the investment team evaluating these factors ultimately deciding to build a spec Class A office building. Deal level fundamentals speaks to the WHY behind doing the deal.
Fundamentals of a region, also touches on supply/demand, rental rates, valuations, and also highlights the macro environment. You frequently hear people comparing/contrasting regions at the institutional investor who can deploy capital anywhere in the country (sometimes the world). i.e. Europe is coming out of a recession, QE is coming to a halt, and the general area is showing signs of growth that could positive impact real estate investment in select major cities.
Hope this helps.
Thanks cpgame. So if I were to describe them the following way, is it a good summation, or would you describe it differently?
Deal level
Regional level
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