Analyzing market trends

The uncertainty of the market causes many developers to hesitate in developing their projects. However, flex is unique in that the market will always have a demand for it. It’s just a matter of deciding when and where to develop your flex spaces. In this blog, we will discuss how to analyze market trends to ensure the safety of your investments.

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Market Analysis

As a developer, market analysis is something I’m doing constantly to ensure I’m developing my flex spaces in the right place at the right time. Market analysis involves researching and analyzing the local markets to determine demand for commercial real estate in the area. Evaluating trends in population growth, income levels, employment rates, and other demographic factors will help you determine the demand for commercial real estate. Demographic factors will also help you gauge the future growth of that investment area. Additionally, you will be able to identify factors that may impede your investment and assess the potential for future development.

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The best tool for conducting market analysis is the internet! There are a plethora of websites available for this specific reason, including LoopNet, JLL, Census Bureau, etc.

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Evaluating Property Value

The most efficient way to determine the value of a property is by considering comps. Comps are properties that are similar in size, location, and use to the property being evaluated. Comparing comps allows developers to estimate the value of the property they are evaluating. They can also be used to determine potential rents, vacancy rates, and other key factors of a flex property.

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However, it is important to remember that there are many extraneous factors that influence the value of a property. Location, size, age, condition, and other features should also be considering when comparing two properties. For example, properties located in highly desirable areas may have a higher rental rate than similar properties located in less desirable areas. Therefore, it is important to keep note of the external factors that can influence comps and other similar properties.

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Appraisal and Risk Assessment

Once you have finished analyzing local markets and identifying comps, you can seek an appraisal of the property you’re interested in. An appraisal is an independent assessment of the value of a property based on market data, comps, and other factors. It is typically required by lenders when financing a commercial real estate project.

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Market analysis can also determine the risk of investing in a flex space in a particular area. By carefully analyzing market data and evaluating comps, you can identify potential risks to a project, such as oversupply or changes in market conditions. Identifying potential risks prior to investing will help you adjust your plans to ensure the safety of your investment.

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Market analysis may be overwhelming for first time developers, but becomes easier with practice. Thats why I’ve created Flex Space Untapped, a community where me and my team teach all the ins and outs of commercial real estate development, including in-depth look at market analysis. If you’re ready to start developing your own projects, tap in and lets get started!