Basic Concepts of Real Estate Marketability AnalysisProperty Productivity ConceptsSlide 3Property Productivity: Site and ImprovementsSlide 5Slide 6Slide 7Slide 8Property Productivity: Legal and Regulatory AttributesSlide 10Slide 11Property Productivity: Location DeterminantsSlide 13Slide 14Slide 15Slide 16Slide 17Slide 18Slide 19Slide 20Urban Growth Structure AnalysisSlide 22Slide 23Slide 24Slide 25Slide 26Slide 27Slide 28Slide 29Slide 30Market Area ConceptsDemand Concepts Local Economic AnalysisRelationship of the Local Economic Overview to the Marketability Analysis ProcessDemand Side Economic VariablesSlide 35Slide 36Slide 37Slide 38Slide 39Slide 40Slide 41Slide 42Demand AnalysisSlide 44Supply AnalysisSupply and Demand InteractionSummary of the Basic ConceptsSlide 48Slide 49Feasibility RentFeasibility Rent an exampleSlide 52Slide 53So That’s Basic Concepts of Real Estate Marketability Analysis1Basic Concepts of Real Estate Marketability AnalysisWayne Foss, DBA, MAI, CRE, FRICSFoss Consulting GroupEmail: [email protected] Productivity ConceptsProductivity Analysis - Analysis of a property’s capacity to deliver services to meet human needs, house economic activities, and supply satisfaction and amenities.A parcel of real estate produces (supplies) services for those who use it.Price paid is a function of:its supply of services relative to potential users’ purchasing powerneed for its servicesinability to find good substitutes at a lower priceMarket Analysis in Real Estate is different from other types of market analysisreal estate is not well definedproduct can change over timelocation is fixed3Property Productivity ConceptsFocus of the discussion for all aspects of the subject property is to:Segment the subject market to address advantages and disadvantagesProperty Productivity Analysis seeks to answer:What does the subject have to offer to the market?What are the subject’s competitive advantages and disadvantages4Property Productivity:Site and ImprovementsDesign and condition of the subject can limit the potential market it can serve.Physical attributes analysis is the initial action in marketability analysisPhysical attributes of the site:Size, Shape, Topography, ClimateVegetation, Natural Drainage, FloodplainSoil and Subsoil5678Property Productivity:Site and ImprovementsPhysical Attributes of a StructureExterior physical featuresSubstructure and SuperstructureInterior physical features:Walls, Supports and FinishEquipment and Mechanical SystemsPlumbing, Heating, Ventilating, and air-conditioningElectricalMiscellaneous including fire protection, sprinklers, escalators and elevators, signal, alarm or call systemsMarket Appeal AttributesUnique and Special features of a propertyThink: Appeal to Who or what group of users?9Property Productivity: Legal and Regulatory AttributesRegulations may be Public or PrivateCan enhance or detract from the value of the propertyExamples of Constraints:Local Zoning Ordinances and General Plansrestrict a site that is ideal for an office building to residential housingstrong neighborhood association prevents changes in useLocal Subdivision Codesrequirements for extra wide streets and landscaping increase cost of development, thereby reducing the supplyExamples of Enhancements:Rezoning of a neighborhood that is undergoing transition to a higher and more intensive use. (i.e.: residential to commercial)101112Property Productivity: Location DeterminantsLinkages:Transportation linkagesMovement of people, goods and services to and from the subjectUtility linkages: gas pipelines, sewer, water, telephone, electricityComponentsRoute: The established or directed course of travel between two spatially separate parcels of real estateAccess: The ability to enter or pass to a site from a route, or to a route from a site.Examples are streets, curb cuts, sewer lateralsTravel Mode: The locomotion method for traversing a route and gaining access.Examples are automobile, bus, train, truck, airplane, boats, etc.Route Orientation: A route may be oriented inward toward the subject, outward from the subject or dual directional.Example, a grocery store located on a busy street so that people returning from work can easily stop.131415Property Productivity: Location DeterminantsExposure and ExternalitiesMay have positive or negative effects on the productivity of the site and its linkagesNeighborhood Externalitiesneighborhood character - properties compatibility with each otherLinkage Externalitiesimpairment to the productivity of the land such as when a sewer has reached it’s capacity, but the neighborhood is only one-half developed or streets are too narrow and overcrowded.Classification of Externalitiescan be Positive or Negative, Natural or Man-made16Property Productivity: Location DeterminantsAssociations: Different types of property require different linkages and land use associationsHousing must be linked to jobs, shopping and community facilitiesRetail uses need customersOffice uses are supported by hotels, print shops and restaurants17181920Property Productivity: Location DeterminantsSitus Analysis as a Land Use PredictorDefinition: The total urban environment as it relates to a specific land use on a specific land parcel as they function in time.A Process of analysis of the subject locationIdentifying activities in the areaEstablishing the nature of associations between the activitiesIdentifying and analyzing the accessibility of the site to the surrounding areaIdentifying and evaluating the total environmental impact of the area on the site use.21Urban Growth Structure AnalysisTheories of Urban GrowthConcentric Zone StructurePresumes five concentric zones that influence property usePresumes growth is outward from the central core.Can be a ripple effect from the center of major intersections of transportation arteriesSector StructureUrban area will develop in sectors in which high, middle and low-income residents will tend to groupHigh income groups will purchase the most desirable areas for their housesMiddle groups will strive to join the upper-income groupsBasic premise is that higher-income groups establish the general direction of urban growthPresumes that
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