Where to situate that new property or look for that new conversion project? And what features and amenities are required to ensure that it competes successfully with existing stock, achieves stabilization on schedule, and leads to a favorable take-out loan?
Performing the rigorous due diligence that is so essential to making sound site selection or conversion project decisions can be difficult and time consuming, especially when considering proposed development in an unfamiliar market. Sure, the metro as a whole is performing well, but what about the particular submarket containing the target site or property? Are the income assumptions reasonable and sufficient to support timely stabilization and take-out, considering the location and class of the property, the performance of its peers, and the expected changes in market health?
When considering a new construction or conversion opportunity, our developer clients take a few seconds to run a customizable Rent Comparables report. Knowing the average rent and vacancy in the area, and Reis’s local forecast for both, is critical for making sound financial projections, especially with respect to anticipated stabilized income, property valuation, and the likely potential amount of a take-out loan. Additionally, a look at New Construction Comparables can alert the developer to any parallel projects that might pose a competitive threat to projections.