Table Of ContentREAL ESTATE R
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MARKET ANALYSIS S
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Trends, Methods, and Information Sources M
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THIRD EDITION N
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The standard introductory guide on analyzing real Highlights of the third edition include: s
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estate markets, the third edition of Real Estate Market M
■ Increased attention paid to industrial property e
Analysis includes comprehensive updates from previous types, in response to the growing warehousing and th
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editions while providing a practical “how-to” for evaluating e-commerce demand. ds
several property types. In addition to highlighting development ,
trends and explaining recognized research and analysis ■ Ways to find information on employment, labor force, an
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methods, the third edition provides an updated and expanded and population/household trends that form the basis In REAL ESTATE
list of information sources, both national and local, for a of demand analysis. fo
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wide range of property types. It captures a transformative ■ Perspectives on property supply/demand trends available m
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decade’s worth of market changes that allows students, from trade and professional associations, real estate tio MARKET ANALYSIS
practicing real estate professionals, and government officials companies, government agencies, and private vendors. n
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to understand how to inspect proposed development sites, o
■ New examples (tables and charts) illustrating ways to u
evaluate competitive properties, conduct interviews with r
organize and present information. c Trends, Methods, and Information Sources
competitors, and find information. e
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Topics covered include the purpose, content, and users ■ Comments on trends affecting the need for residential
of market analysis; defining market areas; how to analyze space (homeownership rates and the physical Th
demand and supply; finding, interpreting, and presenting characteristics of new housing); new hotels that cater ird
economic and demographic data; and understanding to millennials; shifts in retail sales and their effect on E THIRD EDITION
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the characteristics of several property types, including demand for distribution space and “last mile” deliveries); it
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residential, retail, office, industrial/warehouse, hotels, and specialty products (senior housing, affordable n
and mixed-use development. housing, coworking office space).
■ A revised and expanded webliography listing up-to-date
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sources of information available on the internet for each e
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property segment. or
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re Deborah L. Brett
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U.S. $129.95
ISBN 978-0-87420-428-5
2001 L Street, NW 59999
Suite 200
Washington, DC 20036-4948
www.uli.org
9 780874 204285
ISBN 978-0-87420-428-5
ABOUT THE URBAN LAND INSTITUTE
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and urban development professionals dedicated to changes, new economic drivers, technology advancements,
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the responsible use of land and in creating and sustaining Peer-to-peer learning is achieved through the knowledge
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ULI’s interdisciplinary membership represents all that reinforce ULI’s position as a global authority on land
aspects of the industry, including developers, property use and real estate. In 2018 alone, more than 2,200 events
owners, investors, architects, urban planners, public were held in about 330 cities around the world.
officials, real estate brokers, appraisers, attorneys, Drawing on the work of its members, the Institute
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© 2019 by the Urban Land Institute
Printed in the United States of America
All rights reserved. No part of this book may be reproduced in any form or by any
means, electronic or mechanical, including photocopying and recording, or by any
information storage and retrieval system, without written permission of the publisher.
Urban Land Institute
2001 L Street, NW, Suite 200
Washington, DC 20036-4948
Recommended bibliographic listing:
Brett, Deborah L. Real Estate Market Analysis: Trends, Methods, and Information
Sources, 3rd ed. Washington, DC: Urban Land Institute, 2019.
ISBN: 978-0-87420-428-5
ii Real Estate Market Analysis
Primary Author Project Staff
Deborah L. Brett James Mulligan
President Managing Editor
Deborah L. Brett & Associates
Plainsboro, New Jersey Publications Professionals LLC Editorial Team
Manuscript Editors
Reviewers and Contributors
Brandon Weil
Art Director
Elizabeth M. Beckett
President
Amy Elfenbaum, Arc Group Ltd
Real Estate Strategies Inc./RES Advisors
Book Design and Layout
Paoli, Pennsylvania
Craig Chapman
Tony Biddle
Senior Director, Publishing Operations
Principal
Biddle Hotel Consulting
Philadelphia, Pennsylvania
Jon B. DeVries
Founding Director
Marshall Bennett Institute of Real Estate
Roosevelt University
Vice President, Research
Lambda Alpha Foundation
Chicago, Illinois
Valerie S. Kretchmer
President
Valerie S. Kretchmer Associates
Evanston, Illinois
M. Leanne Lachman
ULI Foundation Governor
Executive in Residence
Columbia Business School
New York, New York
Stephen H. O’Connor
Associate Professor of Practice in Real Estate
Freeman College of Management
Bucknell University
Lewisburg, Pennsylvania
Real Estate Market Analysis iii
ABOUT THE AUTHOR
Deborah Brett, AICP She is a longtime member of ULI and a frequent contributor
to its publications. With Adrienne Schmitz, she wrote the
Deborah L. Brett is a real estate and planning consultant to
first and second editions of Real Estate Market Analysis and
a wide range of private and public organizations for which
was a contributor to three editions of ULI’s Real Estate
she provides project-related market studies, consumer
Development: Principles and Practices. Both books are used
surveys, and trend analysis. Areas of specialization include
by real estate and planning programs at many universities.
demographic and economic analysis, survey research, and
With M. Leanne Lachman, she cowrote two editions
project planning for commercial and residential developments,
of Global Demographics: Shaping Real Estate’s Future in
including mixed-use plans, commercial revitalization,
2008 and 2009. Also with Lachman, Brett conducted two
market-rate and affordable housing, and transit-oriented
national surveys of millennials’ shopping habits and housing
development.
preferences that were published by ULI as monographs in
In 1993, Brett formed Deborah L. Brett & Associates,
2013 and 2015, respectively. For ULI Washington, they
an independent consulting practice. She previously was
cowrote two surveys of millennials’ housing circumstances
senior vice president and director of consulting services
and satisfaction with living in the District of Columbia and
at Real Estate Research Corporation in Chicago. In her
its close-in suburbs; the surveys were published in 2015
18-year career there, she directed major land use policy
and 2018.
analyses for many government agencies. She also prepared
Brett is a member of the American Institute of Certified
development strategies, housing analyses, and retail and
Planners (AICP) and Lambda Alpha, the real estate and
office market studies for private clients, including
land economics honorary society. She taught online classes
developers, lenders, investors, and nonprofit organizations.
in residential and retail market analysis for Rutgers
Brett holds a master’s degree in urban and regional
University’s Bloustein School of Planning and Public Policy.
planning from the University of Illinois at Urbana-Champaign.
ACKNOWLEDGMENTS
Completing this textbook would not have been possible professional organizations, real estate brokerages, and
without the help of colleagues, clients, and friends consulting firms shared current information about market
who shared their skills and experience as contributors conditions, property performance, and analytical methods.
and reviewers. They highlighted trends that were important They are cited in the webliography, figures, sidebars, and
to identify and provided examples of tables and maps. In quotations throughout the book.
addition, they sent links to reports and timely articles from This effort would not have been successful without the
government sources and the real estate press. Special thanks efforts of ULI senior editor Jim Mulligan, Barbara Hart and
to Beth Beckett, Jon DeVries, Valerie Kretchmer, and Leanne the editorial team at Publications Professionals LLC, ULI
Lachman, all of whom I have had the pleasure to work with art director Brandon Weil, and designer Amy Elfenbaum.
for many years. The contributions of Adrienne Schmitz, They substantially improved both the text and the visual
coauthor of the first and second editions of this book, shaped appeal of the book.
the structure and content of this updated edition. Numerous
iv Real Estate Market Analysis
PREFACE
Like the first two editions, this third edition of Real for warehouse or distribution space. It also notes the
Estate Market Analysis was conceived as a practical concentration of industrial development in major port and
guide for analyzing the market potential of real estate railroad intermodal centers. Chapter 8 provides information
development and property acquisitions. Other textbooks about hotels and other short-term lodging options. Chapter 9
on this topic have emphasized economic theory and explains mixed-use projects and what is needed for them to
mathematical formulas, but most practitioners combine succeed. An appendix includes a glossary and a webliography.
data analysis with their understanding of the subjective Throughout the book, considerable attention is given to
aspects of real estate. This book emphasizes the importance providing information about data that are available from
of fieldwork and hands-on experience: seeing the subject both public and private-sector sources. Note, however, that
property and its competition, talking to brokers and property new information sources (and providers) are always emerging,
managers, and understanding the needs and preferences of while established ones may merge or change, with their
tenants and buyers in today’s economy. It also provides products evolving over time. With greater use of “big data”
guidance about data sources and their limitations, as well to guide real estate investment decisions, competition
as ways to present data to support market conclusions. among information providers is heating up, and fewer
This book does not focus on aspects of development supply-side sources are available to market analysts without
finance—sources of equity and debt capital, loan terms, paid subscriptions or one-time fees.
and expected rates of return—that are critical to project Where possible, we have provided examples of
feasibility. Nor does it closely examine the various financial information that can be obtained free. Those examples
or tax incentives available from government agencies to come from publicly available reports that are commissioned
encourage commercial and industrial development or by government agencies or provided on commercial
affordable housing construction. For all but the smallest brokerage websites (where quality data and analytic reports
deals, multilayered financing has become the norm. The can help persuade property owners or tenants to use the
availability of equity capital and the terms that can be brokerage firms’ sales, leasing, financing, or property
obtained for construction loans or permanent mortgages management services). The examples are not intended to
are influenced by results of market studies, which is why suggest the full range of market information that can be
market research is so important. obtained from private providers whose primary business is
This book is organized around real estate product types: selling research services. Also, this book does not indicate
the first three chapters introduce that topic, discuss the prices for statistics obtained from private vendors because
basic approaches, and instruct readers on where to availability, geographic coverage, and costs change
find and how to present or interpret data (with an emphasis over time.
on employment information). Chapter 4 highlights This book is intended for real estate, planning,
demographic information needed to understand demand; architecture, and business students. It is also a useful
discusses residential product types (both for sale and reference for individuals who are starting a career with real
rental); and introduces niche developments that target estate investment, development, or property management
students, seniors, and low-income households. Chapter 5 companies, as well as related public sector agencies. It
covers retail development, where market changes have been will also be helpful for experienced professionals who are
most dramatic since the second edition was published. shifting to different disciplines within the real estate
Chapter 6 covers office markets, including growth in development field and the public sector or for those who
shared office spaces (typically referred to as “coworking”) just want to gain an understanding of real estate market
as a growing source of tenancy, especially in urban centers. analysis methods and information sources.
Chapter 7 presents an expanded discussion of industrial
real estate as it reflects on how the growing importance of
e-commerce and omni-channel retailing affects the market
Real Estate Market Analysis v
CONTENTS
Abbreviations and Acronyms ..........................................viii Demographic Data Sources .........................................42
Consumer Surveys and Focus Groups ........................45
CHAPTER 1
Documentation of Historical Supply Trends
Understanding Real Estate Market Analysis ...........2
and Current Conditions .............................................49
What Is Real Estate Market Analysis? ...........................5
Importance of Fieldwork ............................................54
Why Do a Market Analysis? ..........................................5
Documentation of Historical and Future
How Does Market Analysis Fit into the Construction Activity ..................................................55
Development Process? ..................................................7
Presentation of Findings .............................................55
Who Uses Market Analysis? .........................................7
Who Does Market Analyses? ........................................9 CHAPTER 4
Housing .................................................................58
Factors Affecting the Cost of a Market Study ...............11
Housing Stock Overview: Products and
Summary ....................................................................12
Community Types ......................................................59
Book Outline ..............................................................12
Single-Family and Multifamily Stock:
Size and Age ...............................................................67
CHAPTER 2
Cyclical Nature of New Housing Construction ...........68
Basic Approach to Real Estate
Market Studies .....................................................14 Characteristics of New Single-Family Homes .............69
New Multifamily Buildings: Styles, Sizes,
Describing the Regional or Metropolitan Setting ........15
and Features ..............................................................71
Defining the Market Area ............................................16
Housing Tenure ..........................................................73
Inspecting the Site .......................................................18
Demographic Trends Affecting
Demand Analysis .......................................................19 U.S. Housing Markets ................................................77
Supply Analysis ..........................................................20 Preparing a Housing Market Study .............................83
Reconciling Demand and Supply .................................21 Recommendations and Monitoring ............................97
Recommendations ......................................................23 Data Sources ..............................................................98
Importance of Illustrations ..........................................24
CHAPTER 5
Providing an Executive Summary ...............................25
Retail Space ........................................................104
CHAPTER 3 Why Do a Retail Market Study? .................................105
Market Conditions: Employment,
Trends in Shopping and Spending ............................106
Demographics, Demand, and Supply ....................26
Types of Shopping Centers ........................................112
Economic Indicators...................................................28
Staying Competitive ..................................................119
Visitor Profiles and Tourism Trends ...........................36
Prospects for New Construction ................................121
Consumer Demographics ...........................................36
vi Real Estate Market Analysis
Preparing a Retail Market Study ...............................122 CHAPTER 8
Hotels and Lodging .............................................172
Defining the Trade Area ...........................................123
Hotels as Real Estate .................................................174
Trade Area Demand Demographics and
Purchasing Power .....................................................125 Product Types ...........................................................175
Using Shopper Data Analytics ...................................129 Preparing the Market Study ......................................183
Understanding the Supply Side ................................130 Evaluating a Site .......................................................184
Construction Activity and Future Competition .........131 Determining the Competitive Market Area ...............184
Putting It All Together ...............................................131 Analyzing Demand Segments ....................................185
Data Sources .............................................................131 Fluctuations in Demand ............................................189
Competitive Inventory ..............................................190
CHAPTER 6
Future Supply ............................................................192
Office Space .......................................................136
Projecting Performance .............................................193
Characteristics of Office Buildings ............................137
Data Sources ............................................................194
Using Office Market Studies ......................................142
Preparing an Office Market Study .............................143
CHAPTER 9
Defining the Market Area ..........................................143 Mixed-Use Development .....................................196
Site Evaluation ..........................................................144 Background ...............................................................197
Demand for Office Space ...........................................144 Analyzing the Market Potential of
Mixed-Use Projects ..................................................200
Tracking Supply.........................................................149
Understanding Synergy ............................................202
Evaluating Competitive Buildings .............................151
Using Consumer Research and Social Media ...........206
Putting It All Together ..............................................152
Putting It All Together ...............................................207
Data Sources ............................................................153
Appendixes .........................................................210
CHAPTER 7
Industrial and Warehouse Space ........................156
A. Glossary ................................................................211
Characteristics of Industrial and B. Webliography ........................................................217
Warehouse Buildings ................................................157
Specialized Markets ..................................................162 Index ...................................................................224
Demand for Industrial Space .....................................163
Defining the Market Area ..........................................164
Supply Analysis .........................................................165
Putting It All Together ...............................................169
Data Sources .............................................................169
Real Estate Market Analysis vii
ABBREVIATIONS AND ACRONYMS
3PL third-party logistics company LED Local Employment Dynamics
AAA American Automobile Association LEED Leadership in Energy and Environmental Design
AARP formerly known as American Association of LEHD Longitudinal Employer-Household Dynamics
Retired Persons LIHTC low-income housing tax credits
ACS American Community Survey LMA labor market area
ADR average daily room rate LODES LEHD Origin Destination Employment Statistics
AGI adjusted gross income LQ location quotient
AHS American Housing Survey MHI Manufactured Housing Institute
AMI area’s median income MPC master-planned community
APA American Planning Association MSA metropolitan statistical area
ARDA American Resort Development Association NAA National Apartment Association
ASHA American Seniors Housing Association NAHB National Association of Home Builders
B&B bed-and-breakfast NAICS North American Industrial Classification System
BEA Bureau of Economic Analysis NAIOP NAIOP, the Commercial Real Estate Development
BEBR Bureau of Economic and Business Research Association (formerly National Association of
BLS Bureau of Labor Statistics Industrial and Office Parks)
BOPUS buy online, pick up in store NAR National Association of Realtors
CAM common area maintenance NCHMA National Council of Housing Market Analysts
CBD central business district NIC National Investment Center for Seniors
CBP County Business Patterns Housing & Care
CBSA core-based statistical area NIMBY not in my backyard
CCRC continuing care retirement community NLIHC National Low Income Housing Coalition
CES Current Employment Statistics NMHC National Multifamily Housing Council
CEX Consumer Expenditure Survey OM offering memorandum
CMD Construction Market Data (firm) PPS Project for Public Spaces
CPS Current Population Survey PUMS Public Use Microdata Sample
CRE Counselors of Real Estate QCEW Quarterly Census of Employment and Wages
FAR floor/area ratio R&D research and development
FHA Federal Housing Administration REIT real estate investment trust
FHFA Federal Housing Finance Agency RevPAR revenue per available room
FMR Fair-Market Rents (HUD) RevPOR revenue per occupied room
GAFO general merchandise, apparel and accessories, SMERF social, military, educational, religious,
furniture and home furnishings, and other goods and fraternal
GIS geographic information system SNAP Supplemental Nutrition Assistance Program
GLA gross leasable area STEM science, technology, engineering, and math
HUD U.S. Department of Housing and Urban TIF tax increment financing
Development TOD transit-oriented development
HVAC heating, ventilation, and air conditioning ULI Urban Land Institute
ICSC International Council of Shopping Centers USDA U.S. Department of Agriculture
IRS Internal Revenue Service VA U.S. Department of Veterans Affairs
JLL Jones Lang LaSalle Vrbo vacation rental by owner
LAUS Local Area Unemployment Statistics ZBP Zip Codes Business Patterns
viii Real Estate Market Analysis
REAL ESTATE
MARKET ANALYSIS
Trends, Methods, and Information Sources
