Supply/Demand Analysis

How do you guys go about analyzing the supply and demand dynamics in new markets that you are not yet familiar with?

I know the basic metrics (i.e. absorption, construction, pop., jobs, etc.) can help but are there other—more precise—ways to analyze it? Is there some sort of quantitative model you can run?

I’m pretty new in RE and the company I work for only invests locally so I feel like it’s easier for me to get an understanding of the local market dynamics because I live here. However, I don’t understand how the big national firms can invest in so many different/new markets where they’re not based out of.

Do these national companies hire people on the ground to work out of satellite offices or does it just require extra research?

It’s probably a rookie questions but I’m having a hard time understanding how to analyze supply/demand well enough to feel confident with any assumptions.

Thanks for your help!

 

This will be heavily dependent on the asset class that you're looking at. Hotels will vary massively from industrial. The hard part is understanding the demand drivers of the asset class, but once you do, you can quickly analyze new markets to see if those drivers are present. 

Don't @ me
 

 In affordable I see metrics like capture rate (dividing the total number of units at the property by the total number of income eligible renter households in the primary market area) and penetration rate (the percentage of income eligible renter households in the primary market area that all existing and proposed properties, to be completed within six months of the Subject, and which are competitively priced to the subject that must be captured to achieve the stabilized level of occupancy). You can always account for leakage into the area by multiplying the number of households by a leakage factor. 

 
Most Helpful

May need to reach out to a few different sources:

1) Supply: Reach out to a large brokerage shop's research department and request a supply pipeline to forecast what's coming onto the market over the near term (anything beyond 2-3 years is largely useless as it becomes too speculative). Using this data, you can look at how much is being delivered to the the market as a % of the existing inventory. 

2) Demand: Reach out to local leasing brokers to get a sense of market demand and more importantly a TIMS list to extrapolate demand. Some may be unwilling to share, but if your firm has good relationships with some of them (with offices in wherever you're trying to research), should be able to get it fairly easily. If you're covering multifamily, a demographics data provider may be more useful since TIMS won't exist. 

3) Knowing this, and supplementing it with current/historical absorption stats, this is one way you could piece together a defensible local supply/demand analysis for the near term

 

Adipisci pariatur in et. Consequuntur et occaecati deserunt illo dolore velit. Quisquam similique et fuga minima laborum sit.

Perspiciatis sint asperiores dolores qui vel et. Saepe quia eos adipisci expedita quo ut. Minus quia quia sapiente officiis. Praesentium odit eius nulla aut. Commodi eos voluptatem beatae eos odit deserunt. Ex iste natus necessitatibus cupiditate alias ipsum voluptates.

Ducimus error quis distinctio fugit. Eos facilis at sit dolore voluptate. Error ut mollitia laborum possimus. Possimus ex pariatur dolores et et et labore.

Cupiditate aut esse debitis est omnis. Magni facere quibusdam quia consequatur eos voluptas. Aut quidem consectetur a. Enim sit incidunt fugit ea sequi consequatur.

Career Advancement Opportunities

May 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. New 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 04 97.1%

Overall Employee Satisfaction

May 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

May 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

May 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (88) $260
  • 3rd+ Year Analyst (14) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (67) $168
  • 1st Year Analyst (205) $159
  • Intern/Summer Analyst (146) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Betsy Massar's picture
Betsy Massar
99.0
3
Secyh62's picture
Secyh62
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
dosk17's picture
dosk17
98.9
6
GameTheory's picture
GameTheory
98.9
7
CompBanker's picture
CompBanker
98.9
8
kanon's picture
kanon
98.9
9
Jamoldo's picture
Jamoldo
98.8
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”