Several key variables impact the status of an office market and its ability to absorb new or redeveloped office space. You will gather relevant data by reviewing the following resources and reports:
(Note: These reports can also be found in the Case Study Resources area in the course.Please be sure to review any other relevant reports in this area, if needed.)
Data to determine for your site’smarket area:
- Total amount of space in the current office inventory in square feet
- Vacancy rate for office space
- Absorption rate: The amount of office space that has been absorbed annually over the last five years
- Average actual rental rates per square foot for office space
- Total amount of office space under construction
- Percentage of under construction space that ispre-leased
- Projected job growth within your site’s county, MSA, or region
With these figures, use the market fundamentals from this week’s reading to determine if current conditions for the site’s office market are oversupplied, limited, or robust. With a limited market, a small amount of office construction on the site might be appropriate. With a robust market for new construction, a more aggressive office program should be considered.
Additional research is necessary to further refine the market potential for the subject site. This investigation often involves studying business news and/or contacting the economic development staff at a city or county level. From these sources, you are seeking insight into new projects on the horizon, any growth industries in the area, or any targeted industries that are the focus of local economic development efforts. With this knowledge, you will be able to identify any potential factors that could alter the outcome of your office market assessment.
As a final step, you will need to make a determination of what percentage of the potential office demand for your marketarea will be reasonably captured at the subject site. Prepare an overview of office space that is currently available or other sites where office buildings could be constructed. Evaluate your site against these opportunities to assess how competitive your site would be in attracting office tenants.