How do you assess the market demand and supply for your property type and location?

1 Identify your property type and location

The first step is to identify your property type and location. This will determine the relevant market segment and submarket that you are competing in. For example, your property type could be office, retail, industrial, or residential, and your location could be urban, suburban, or rural. Each property type and location has different characteristics, drivers, and trends that affect the demand and supply.

2 Research the market data and trends

In order to research the market data and trends for your property type and location, you can use various sources of information such as industry reports, online databases, local brokers, appraisers, and trade associations. It is important to look for data and trends on indicators such as occupancy rate, absorption rate, vacancy rate, asking rent, effective rent, inventory, and construction. These metrics will help you measure the current and projected demand and supply for your property type and location while also allowing you to compare your property with the market average and benchmarks.

3 Analyze the market drivers and challenges

Analyzing the market drivers and challenges for your property type and location is the third step. You should identify the economic conditions, demographic trends, consumer behavior, competition, and regulations that influence the demand and supply of your property. These factors can reveal the opportunities and threats for your property type and location, allowing you to adjust your rent and lease terms accordingly. Understanding the level of income, employment, growth, inflation, population size, age, income, preferences, spending habits, tastes, needs of potential tenants/customers, number/quality/pricing of existing/new properties in the market as well as laws/rules/policies affecting development/operation/leasing is key to success.

4 Evaluate your property's strengths and weaknesses

The fourth step is to evaluate your property's strengths and weaknesses compared to the market demand and supply. You should assess your property's features, such as size, condition, quality, location, and reputation. These features will help you determine your property's competitive advantage or disadvantage in the market and highlight your value proposition and areas for improvement. Additionally, you can use them to understand how your property stands out from the competition and what needs to be improved.

5 Estimate your property's rent potential

The final step is to estimate your property's rent potential based on the market demand and supply analysis. To do this, you should use a combination of methods, such as the market-based method which compares your property's rent with the market asking and effective rents for similar properties, the income-based method which calculates your property's rent based on the expected income and expenses of your property, and the cost-based method which estimates your property's rent based on the replacement or reproduction cost of your property. All these methods will help you establish a realistic rent range that reflects the market conditions and your property's characteristics. By following these steps, you can assess the market demand and supply for your property type and location, thus allowing you to negotiate a lease that maximizes your return and minimizes your risk.