Wealth Opportunities in Commercial Real Estate: Management, Financing, and Marketing of Investment Properties

The Composition of a Feasibility Study

A feasibility or market study focusing upon what current competitive rents are is needed to determine if $2.23 per month net, net, net can be achieved and, if so, within what time frame. The study should show what comparable competing space is renting for as well as the vacancy factor in the trade area. Obviously, in order to determine the answers to these questions, you must define what you intend to build and the trade area. The problem is that to some extent the feasibility study is intended to enlighten you as to what you should build, but in order to effectively generate the feasibility study you must make assumptions as to what you are going to build. The reality is that the developer usually has a fairly good idea of what he wants to build going into a project based upon zoning, his past experience, preleasing, and the “logical fit” for the project. Of course, in hindsight a different usage might have been “better” for a site, but that is what makes a ballgame. The point is that the developer's vision of what should be built and the feasibility study are interdependent. The developer's ideas affect the study and the study should influence the final product. Once the product and the location are selected, it can be determined which boundaries should be considered to be within the subject property's competitive market area, and therefore which projects should be scrutinized to determine rent and occupancy levels. Interviews with leasing ...