BUS 516 - Lesson 4 – Market Conditions

A full understanding of the market in which one operates is essential to making good decisions for both the landlord and the tenant, and this knowledge is crucial to the success of any property. Real estate is a cyclical industry. All real estate operates in cycles. At one time these cycles were approximately ten years apart. The economy would go through roughly ten years of good growth and then hit a recession, and the real estate markets would follow the same pattern. In more recent years, these cycles seem to be closer to five years in length, and this is likely to change again in the future. In addition to the cycles of real estate, developers must contend with the development lead time for commercial properties, which can easily run from two to seven years. This means that, at the start of a project, the developer or landlord has no assurance of where the market will be in several years when the project is completed. Yet developers must still make the best possible assumptions and move forward with their project. Anchor tenants and large chain stores are also dependent on the real estate development market. Although they must project their growth well into the future as landlords do, tenants generally have a shorter timetable to manage their expansion needs.
Muhlebach, Richard; Alexander, Alan (2010-06-14). The Leasing Process (Kindle Locations 2729-2738).
Institute for Real Estate Management. Kindle Edition.

Lesson Learning Objectives
By the conclusion of this Lesson you should be able to:

  • Discuss the importance of understanding the market in which one operates
  • Understand the importance of tenant mix and compatibility in choosing a leasing site
  • Employ a market survey to anticipate market conditions and evaluate competitive rates

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The following Assignments should be completed and submitted to the course faculty via the learning platform for evaluation and grading. Submit your responses to these questions in one WORD document. List the question first, and then your response

Be sure to properly site your sources, both in-text and with a reference list at the conclusion. If you use an online source to support your answers, you must provide a properly formatted link to the source. You should use APA citation format and make sure your sources are credible. In most cases, your responses should be no more than 500 words.
Field Assignment: Conduct a Market Survey
Identify a local area to be surveyed and a property within the area (please provide the address).
Conduct a survey to include the condition of the area, the condition of available properties, a description of a few of the potential properties, access (street, freeway, etc.), rents, lease terms available (build-out allowance, parking, signage, etc.), tenant mix, visibility, and anything else you might be interested in as a potential tenant in the area.

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